The U.S. dollar fell on Thursday, with its weakening against the Japanese yen in particular grabbing the spotlight after a report that the Asian nation had intervened in a bid to prop up its currency.

At 17:33 ET (21:33 GMT), the U.S. dollar index, which tracks the greenback against a basket of six major peers, was down 0.9% to 98.06.

Global oil prices eased after hitting a four-year high of more than $126 a barrel earlier on Thursday on concerns the U.S.-Iran war could lead to a protracted Middle East supply disruption that could inflict deeper damage on the global economy.

The oil markets have been in a period of heightened volatility since the conflict in the Middle East began in late February.

Oil prices jumped on Wednesday, after media reports about an extended U.S. naval blockade and a rejection of a peace proposal by Iran kept tensions elevated in the Middle East.

The critical Strait of Hormuz remained shut amid an impasse between the U.S. and Iran, keeping supply disrupted. Traders also digested the United Arab Emirates’ move to leave the OPEC cartel and a widely expected decision by the Federal Reserve to hold interest rates steady.

Sterling and the euro edged lower against the dollar on Wednesday as markets braced for the Federal Reserve’s rate decision, with Jerome Powell’s final press conference as Chair carrying meaningful hawkish risk given the absence of meaningful progress on a US-Iran deal and the Strait of Hormuz closure. 

A fresh bout of AI-driven jitters in US equities provided the dollar with some early support, though that recovery proved short-lived as month-end rebalancing flows again capped any sustained gains.