The ‌prospect of a peace deal had pushed oil prices below $100 a barrel, eased pressure on emerging-market currencies, and boosted risk sentiment slightly this week.

But comments ​from U.S. Secretary of State Marco Rubio on Tuesday that negotiating a deal with Iran could "take a few days," a day after U.S. forces conducted what Washington called defensive strikes in southern Iran, tempered that market optimism.

The euro eased slightly to $1.163 on Tuesday after rising 0.3% on Monday. The British pound fell 0.2% to $1.347, having risen 0.6% on Monday.

Against a basket of currencies, the dollar ‌was very slightly higher at 99.08, after ⁠falling 0.3% the previous day.

"Markets are right to price some optimism because even a path toward reopening Hormuz lowers the extreme tail risk around oil, inflation and global growth," said Charu Chanana, ⁠chief investment strategist at Saxo in Singapore.

"I would not confuse positive negotiation noise with a durable de-escalation yet. The real test is not the headline deal, but whether tankers can move freely, insurance premiums can fall, and energy flows can normalize," Chanana added.

The shift in ​sentiment ​weighed on the Japanese yen, with the U.S. dollar up 0.2% ​at 159.21 yen, putting the currency pair closer to ‌the 160 level at which traders watch for potential intervention by Tokyo.

Sources have told Reuters that Tokyo intervened at the end of April to haul the yen away from the 160 per dollar mark.

The Australian dollar, often viewed as a proxy for risk, was 0.2% lower at $0.716 after rising 0.6% on Monday.

Treasury yields fell sharply on Tuesday as U.S. markets returned from a holiday, catching up on a drop in global bond yields on the anticipation of a peace deal. [US/]

Oil prices clawed ‌back some of their losses at the start of trading on Tuesday ​on news of the U.S. strikes. Brent crude futures rose 1.5% to $97.76 ​per barrel after dropping 7% on Monday. [O/R]

Analysts don't see ​energy prices returning to pre-war levels any time soon, even with a near-term resolution, as supply ‌chains will take time to normalise and that ​will keep inflation and rate concerns ​firmly in place.

"We still expect a slow oil unwind, even if prices fall sustainably below $100 per barrel in the second half of 2026. This suggests the USD’s terms of trade support should not fade quickly," said OCBC ​strategists in a note.