The safe-haven dollar advanced on Monday, 13 April 2026 as peace talks between the US and Iran broke down and the American Navy prepared a blockade of Iranian ports, though the greenback pared gains as the trading session continued.
Source: Reuters.
The euro was down 0.3% at $1.1689, while the British pound fell 0.4% to $1.3403; both rallied off earlier lows. The risk-sensitive Australian dollar was 0.5% lower at $0.7037 and the New Zealand dollar was off 0.3% at $0.5824.
President Donald Trump on Sunday said the US Navy would start blockading the Strait of Hormuz after talks with Iran failed to reach a deal to end the war, jeopardising a fragile two-week ceasefire. The US Central Command said US forces would begin implementing the blockade of all maritime traffic entering and exiting Iranian ports from 10am ET (1400 GMT) on Monday.
"We did expect negotiations to be difficult and lengthy but assumed that this weekend’s talks would be the beginning of a process which would, at least, result in a degree of situational stabilisation," analysts from BNP Paribas wrote in a report. "This view was clearly misplaced."
BNP added that "we would not be surprised if the negotiations are restarted relatively quickly given the current ceasefire timeline."
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3 daysMeanwhile, the Hungarian forint surged after veteran nationalist leader Viktor Orban lost power to the upstart centre-right Tisza party in Sunday's national election after 16 years in office.
The currency rallied as much as 1.7% to 314.55 against the dollar - its strongest level since January - and jumped 2% against the euro to its firmest in three years.
"Hungarian assets have reacted positively to the news in early trading, in part because the outcome implies that EU fund inflows into Hungary will be fully released relatively quickly," analysts from Goldman Sachs wrote in a report. "EU funds from the current 2021-27 budget account for roughly 3% of GDP per year, with nearly half currently frozen."
The US dollar index, which measures the greenback's strength against a basket of six currencies, slipped 0.1% to 98.999, holding near its highest level since 7 April.
Against the yen, the US dollar was up 0.3% at 159.68 as yields on Japan's benchmark 10-year government bonds jumped 5.5 basis points to 2.49%, the highest level in almost three decades.
Traders are awaiting a speech from Bank of Japan Governor Kazuo Ueda later on Monday which may provide clues about how the central bank will react to the energy shock caused by the Iran war, as the prospect dims of a rate hike at its next meeting ending on 28 April.
"The risk of policy errors is relatively high in Japan and Europe, which means that money will tend to return to USD assets for lack of better alternatives," analysts from Nomura wrote in a note.
