- Dollar steady as US blockade of Iranian ships raises supply risks
- Trump says Iran is in touch with US, wants to make a deal
- BOJ rate hike odds fall as Iran conflict clouds economic outlook
TOKYO, April 14 (Reuters) - The safe-haven dollar edged toward a seventh straight daily decline on Tuesday as investors positioned for a possible diplomatic breakthrough in the Middle East, even as the Gulf remained all but closed to energy shipments.
The U.S. currency drifted between steady and slightly softer against most major peers in the Asia session after falling broadly overnight. It was last down 0.3% at 159.02 yen and largely flat versus the euro at $1.1768.
Reuters reported negotiations between Washington and Tehran were still alive, while U.S. Vice President JD Vance said in an interview on Monday the White House expects Iran will make progress on opening the crucial Strait of Hormuz, through which a fifth of global energy shipments typically pass.
The dollar index , which measures the greenback against a basket of six currencies, was marginally lower at 98.31, near its weakest since March 2, the first trading day after the U.S.-Israeli war with Iran erupted.
A seven-day losing streak for the index would be its longest since December, when investors were positioning for a year of U.S. interest rate cuts and a broad softening for the world's reserve currency.
The New Zealand dollar hovered at $0.5871 and the Australian dollar flirted with 71 cents and its highest levels in nearly a month.
U.S. President Donald Trump said the U.S. military began a blockade of ships leaving Iran's ports on Monday, but added that Iran had been in touch and wanted to make a deal.
The series of comments "has brought some relief to the markets, as it has renewed the possibility of a diplomatic resolution," said Keiichi Iguchi, senior strategist at Resona Holdings.
The Japanese yen, though, remains vulnerable to selling pressure on concerns that the nation's trade balance will deteriorate amid rising risks that crude oil prices stay elevated, Iguchi said.
Chances of a rate hike this month by the Bank of Japan (BOJ), once seen as a strong possibility, have receded as the war keeps markets volatile and muddies the economic outlook, .
Interest rate swaps on Tuesday indicated only a 32% chance of the BOJ raising rates this month, down from 57% on Friday, according to Tokyo Tanshi data.
"We're very much of the view that if the BOJ decides to stand pat at the end of April, then the risks are that the dollar-yen exchange rate is going to punch up through 160 (yen per dollar)," said Ray Attrill, head of forex strategy at National Australia Bank, in a podcast.
Markets see 160 yen per dollar as a red line that raises the risks of currency intervention.
Reporting by Satoshi Sugiyama; Editing by Lincoln Feast, Shri Navaratnam and Kevin Buckland
Source: Reuters