The dollar advanced against most Group of Ten currencies on Monday, its sixth gain in the past seven trading sessions, as negotiations between the United States and Iran remained deadlocked.
The dollar index climbed nearly 0.3%, with the greenback swaying on Iran-related headlines but holding an overall upward bias through the session.
President Donald Trump said the United States held talks with Iran on Monday through mediators. An unnamed US official said Trump is willing to ease sanctions on Iran and unfreeze frozen funds if concrete progress is made on the nuclear issue.
People familiar with the matter said Iranian officials privately express pessimism about reaching an agreement with Washington before the US midterm elections in November to end hostilities and reopen the Strait of Hormuz.
Trump rejected proposals to reopen the Strait of Hormuz, Iran insisted it would not make concessions, and the two sides appeared to remain far apart on a new ceasefire agreement.
The 10-year US Treasury yield rose as much as 11 basis points to 5.27%, while Brent crude climbed as much as 4% to $108.83 a barrel, the highest in roughly two weeks.
"While US-Iran talks may resume this week, there were few signs of a breakthrough over the weekend," Deutsche Bank's Jim Reid said in a report. He added that inflation will be the focus for markets this week, with inflation data due in the United States, Europe and Japan.
Most G10 currencies fell against the dollar on Monday, with the Swiss franc and Swedish krona leading declines, while the New Zealand dollar and British pound edged higher.
The dollar/yen pair fell as much as 0.5% to an intraday low of 156.51. Earlier reports said Japan's top currency official, Atsushi Mimura, said markets should take seriously the "very clear" signals Japan and the United States sent last week about the yen's weakness. As of 3:40 pm New York time, dollar/yen was up 0.1% at 157.40. Note: Japan's top currency official conducted verbal intervention, and the yen rebounded.
The pound/dollar pair rose 0.1% to 1.3257, its second straight day of gains. The euro/dollar pair fell 0.2% to 1.1369.
European Central Bank President Christine Lagarde said rising bond yields will restrain economic growth and limit the pass-through of high energy costs into inflation.
The Australian dollar/dollar pair fell less than 0.1% to 0.7019. Against the backdrop of global market turmoil and an energy shock, Australian Treasurer Jim Chalmers announced that the previous fiscal year's budget deficit narrowed, saying Australia now has one of the strongest budget positions in the Group of Twenty.