The Bloomberg Dollar Spot Index opened the week slightly lower, with U.S. Treasury yields hovering near multi-year highs and oil prices climbing as both the United States and Iran rejected each other's new peace proposals.
The Bloomberg Dollar Spot Index fell 0.1%, following a 1.2% gain last week, which was its largest weekly increase in over two months.
The yield on the 10-year U.S. Treasury note rose 3 basis points to 4.62%, while Brent crude oil advanced 2.3% to $111.80 per barrel.
Earlier, Iran's semi-official Tasnim News Agency reported that the U.S. had proposed a temporary exemption from oil sanctions on Iran pending a final peace agreement. However, a U.S. official, speaking on condition of anonymity due to the sensitivity of the matter, stated the report was inaccurate.
Vail Hartman, U.S. Rates Strategist at BMO Capital Markets, commented, "With the two-year Treasury yield above 4%, the market sees a low probability of normal shipping traffic resuming in the Strait of Hormuz in the near term."
The Japanese yen declined after experiencing significant volatility during Asian and London trading sessions.
The USD/JPY pair broke through the 159 level, rising 0.2% to 159.01.
Market attention is on the fiscal plans of Japanese Prime Minister Sanae Takaichi, who has called for a supplementary budget to address rising commodity prices fueled by the ongoing Middle East conflict.
Win Thin, Chief Economist at Bank of Nassau 1982, noted, "While I have long believed the yen should be stronger, fiscal expansion could continue to weigh on it and may necessitate further foreign exchange market intervention."
The GBP/USD pair rose 0.9% to an intraday high of 1.3450, marking its largest intraday gain since April 30.
The EUR/USD pair increased 0.1% to 1.1637, while EUR/GBP fell 0.5% to 0.8677.
The USD/CAD pair remained stable at 1.3749.
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