Forex weaker on Middle East war de-escalation prospects

The dollar made slight gains, as the euro fluctuated in choppy trade to be down ​0.1% at $1.1599

Currency markets showed signs of fatigue in Asian ​trade on Wednesday, with traders cautious over U.S. president’s efforts to bring an end to ‌the war with Iran.

While the president told reporters the U.S. was making progress in “talks” with Iran, Tehran has denied that negotiations have taken place, keeping investors on edge.

The dollar made slight gains, as the euro fluctuated in choppy trade to be down ​0.1% at $1.1599. The British pound was 0.1% weaker at $1.3396, while the New Zealand dollar slid 0.3% to $0.5822.

The subdued ​volatility contrasted with a surge in equity futures and a plunge in crude oil prices ⁠after U.S. president said on Tuesday the country was making progress in its efforts to negotiate an end to the war.

For ​those reacting to every breaking headline around dialogue between the U.S. and its allies and Iran, including speculation of high-level ​talks and temporary ceasefire proposals, an element of fatigue is now firmly setting in, said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne.

Against the yen, the U.S. dollar was up 0.1% at 158.885 yen, after the release of minutes from the Bank of ​Japan’s January policy meeting showed many board members saw the need to keep raising interest rates without any specific pace ​in mind.

The Australian dollar weakened 0.3% to $0.6976 after the release of inflation data for February, which showed a 3.7% rise prior to the ‌start ⁠of the U.S.-Israeli war with Iran, a slightly slower pace than expected by analysts.

It’s more likely than not that trimmed mean inflation will accelerate in the near term, partly as a result of second-round effects from the oil price shock, analysts from Capital Economics wrote in a research report.