The US dollar turned lower on Friday as risk sentiment outweighed safe haven demand.
President Donald Trump said he would meet with officials to make a final determination on a peace deal with Iran.
However, the currency was headed for a solid monthly gain, driven by a bond sell-off and raised expectations for interest rate hikes.
The US dollar index fell 0.1% to 98.92. The euro edged up 0.1% to $1.1659, while sterling added 0.1% to $1.3456.
Traders awaited any confirmation of a peace agreement between Washington and Tehran. Trump said a deal would include Iran agreeing never to have nuclear weapons, reopening of the Strait of Hormuz with no tolls, and removal of all mines.
Iran's Fars News Agency called Trump's comments a "mixture of truth and lies." Iran stated no negotiations on its nuclear program have taken place yet.
Against this backdrop, oil prices were lower. An agreement would represent the biggest breakthrough in the conflict since late February.
Macquarie's Thierry Wizman said that if crude prices fall due to an opening of the Strait, currencies of energy-importing countries like EUR, GBP, and JPY would benefit. Otherwise, the USD should stay robust.
The continued closure of the Strait of Hormuz has led to the biggest oil supply disruption in history and an inflationary shock, driving expectations of interest rate hikes from major central banks.
The Japanese yen was flat against the dollar at 159.25. Japan's Ministry of Finance spent 11.7 trillion yen ($73.46 billion) on intervention over the past month, but the effect has been limited.
Tokyo core consumer inflation slowed to 1.3% in May, remaining below the BOJ's 2% target, limiting support for the yen.
