Dollar at 10-day lows, yen near key 160 level

The dollar index is up 2% since the Iran war first erupted at the end of February

The dollar held at 10-day lows on Tuesday as a deal to ​end the Iran war buoyed risk appetite, while the yen teetered near the key 160 level after the Bank of Japan hiked rates in a widely indicated move ‌to tame inflationary risks from the war.

Details of the deal have yet to be made public but that didn’t stop international markets from cheering and sending oil prices down.

The dollar index was at 99.76. The index is up 2% since the war first erupted at the end of February in a volatile reaction to a fragile ceasefire and regular tit-for-tat attacks.

Investor attention this week is on a slew of central bank meetings to gauge if the end of the war has come too late to ease near-term inflation concerns.

The Bank of Japan raised interest rates ​to a 31-year high on Tuesday as widely expected. But the board’s 7-1 vote was noted by market analysts, suggesting some uncertainty over the timing ⁠of the next hike.

The only dissent on the rate was Asada’s on dovish grounds, with the path from here made explicitly conditional on the Middle East and the oil pass ​through, a still wide rate differential with the U.S. will struggle to support yen, said Kieran Williams, head of Asia FX at Intouch Capital Markets.

Over the medium term the ​pressure on the yen is unlikely to ease on the rate hike alone, he said, leaving intervention risk as a live near-term risk. Uchida’s presser is the swing factor, how he frames the pace of the next hike will be in focus.

The focus now switches to Deputy Governor Shinichi Uchida’s press briefing at 0630 GMT, where he is likely to reiterate the BOJ’s resolve to continue raising rates, but avoid giving ​explicit hints on timing.

The yen was at 160.29 per U.S. dollar, giving up small gains it had built up ahead of the decision.

The yen has hovered near the 160 milestone in recent ​days that has kept traders wary of another bout of interventions from Tokyo, with even the peace deal unlikely to provide relief for the battered yen.