The US dollar, Treasury yields, and oil prices all fell after President Trump announced the cancellation of planned military strikes against Iran, while risk-sensitive G-10 currencies gained against the greenback.
The Bloomberg Dollar Spot Index dropped 0.1%, having earlier risen as much as 0.2%.
The yield on 10-year US Treasury notes fell 8 basis points to 4.47%, and Brent crude futures declined 3%.
Traders no longer expect the Federal Reserve to implement a full interest rate hike this year.
This shift in sentiment followed a US Producer Price Index report showing May producer prices rose at their fastest pace in over three years.
The PPI increased 1.1% month-over-month in May, with the core PPI rising 0.4%.
The euro gained 0.2% against the dollar to 1.1557, recovering losses incurred after the European Central Bank raised interest rates as expected and following a press conference by President Christine Lagarde.
ECB officials stated in their announcement, "The outlook remains uncertain, with upside risks to inflation and downside risks to growth."
The US dollar fell 0.3% against the Japanese yen to 160.06.
The Bank of Japan Governor Kazuo Ueda has been hospitalized, and Deputy Governor Shinichi Uchida will preside over the post-policy meeting press conference on June 16.
The Australian dollar rose 0.5% against the US dollar to 0.7032, while the British pound gained 0.2% to 1.3396.
Bond investors anticipate that an upcoming by-election could trigger a fresh round of turbulence in the UK's $3 trillion government bond market.
Some information was provided by foreign exchange traders familiar with the transactions, who requested anonymity as they were not authorized to speak publicly.
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