Dollar softens after strong week amid signs of easing bond market rout

The dollar weakened slightly on Monday, but remained near highs notched last week, as a wilting in global bonds appeared to ease.

By 10:11 ET (14:11 GMT), the U.S. dollar index, which tracks the currency against a basket of its peers, had dropped by 0.2% to 99.08.

The euro was last trading up against the greenback by 0.2% at $1.1644, while the British pound had jumped by 0.5% to $1.3390.

Over the weekend, a drone attack caused a fire at a nuclear facility in the United Arab Emirates, while Saudi Arabia said it had intercepted three drones.

The developments cast fresh doubt around a fragile ceasefire between Washington and Tehran, with President Donald Trump writing on social media that "the clock is ticking" for Iran to reach a peace agreement or face potential renewed military action from the United States.

Meanwhile, the Strait of Hormuz, a crucial conduit for roughly a fifth of the world’s oil, remained effectively shuttered to tanker traffic.

Oil prices retreated, erasing earlier gains, after Iranian media reported that the U.S. had proposed the temporary waiver on oil sanctions imposed on the country until a final peace deal between Washington and Tehran is reached. Global bond yields fell, cooling in the wake of a deep sell-off in recent days. 

Analysts suggested the bond market rout had helped the dollar stay relatively resilient. The greenback has been viewed as a safe haven throughout the conflict, due in part to the belief that the U.S. economy -- as a major energy exporter -- may be somewhat insulated from the energy shock.

Investors are now keeping tabs on a meeting of finance minister from the Group of Seven nations in Paris this week, with the officials likely to discuss the Iran war. Ahead of the gathering, Treasury Secretary Scott Bessent said he would call on officials to adhere to U.S. sanctions on Iran designed to prevent financing from flowing to Tehran.

Elsewhere, the yen was hovering around its weakest point against the dollar since April 29, leaving some observers awaiting a possible intervention by Japanese authorities, following reportedly similar moves in late April and early May.