(Web Desk) – The US Dollar paused its recent rally on Thursday as global market sentiment improved slightly on hopes that the ongoing conflict in the Middle East may not escalate further.
In Asian trading, the dollar eased from a more than three-month high, standing at 98.82 against a basket of major currencies. The pause provided relief to the Euro, which stabilized at $1.1628 after sliding earlier this week to its lowest level in more than three months. The Japanese Yen also gained modestly, strengthening to around 156.79 per dollar.
Market sentiment was partly supported by reports suggesting that Iranian intelligence operatives had signalled openness to talks with the Central Intelligence Agency aimed at ending the conflict, although officials in Iran later dismissed the claims.
Investors were also encouraged by prospects of resuming oil shipments through the strategically vital Strait of Hormuz, a major global energy corridor. Insurance broker Marsh McLennan said it had discussed the possibility of restoring maritime trade with U.S. officials.
Currency strategists noted that improving sentiment was also driven by stronger-than-expected economic data from the United States, which showed the services sector expanding at its fastest pace in more than three and a half years during February.
Despite the pause, the dollar remains up more than 1% this week amid volatile trading triggered by geopolitical tensions and rising energy prices. Analysts warn that the surge in oil prices linked to the Middle East conflict could revive inflation concerns and influence the interest-rate outlook for major central banks.
Expectations for policy tightening remain under discussion at institutions such as the Federal Reserve, Bank of England, and the European Central Bank.
Meanwhile, other currencies showed mixed movement. The Australian Dollar held near $0.7068 while the New Zealand Dollar slipped slightly. In China, the Chinese Yuan strengthened modestly after China set its 2026 economic growth target between 4.5% and 5%.
In the cryptocurrency market, Bitcoin and Ethereum fell nearly 1% after rallying overnight as global risk appetite improved.
