The dollar sank to a 10-day trough against major peers on Monday as investors absorbed the outlines of a peace deal between Washington and Tehran, a breakthrough that promises to lift the US blockade on Iran and restore the free flow of oil through the Strait of Hormuz. Brent crude futures plunged more than 5 percent, dipping below $84 a barrel to levels not seen since the conflict erupted in March, while Asian equity markets surged on the sudden easing of geopolitical risk. The memorandum of understanding, brokered after weeks of quiet diplomacy, is expected to be formally signed in Switzerland on Friday, though both capitals cautioned that the fate of Iran’s nuclear programme remains subject to further negotiation.

Viewed from Washington, the framework represents a dramatic pivot from the previous administration’s maximum-pressure campaign, which had choked Iranian exports and triggered a sharp spike in energy costs. President Trump heralded the deal on his Truth Social platform with characteristic flourish, urging the world’s tanker fleets to “start your engines” and let oil flow anew. American officials confirmed the broad contours: an end to hostilities, the lifting of the naval blockade, and the reopening of the Strait of Hormuz, the narrow chokepoint through which a fifth of global crude supplies normally transits. Reports in the US press further suggested the accord may encompass a truce in Lebanon, hinting at a wider regional calming.

Across Asian trading floors, the mood was one of relief tinged with caution. Equities in Hong Kong and Tokyo rallied as the prospect of cheaper energy and unclogged supply chains emboldened investors to rotate out of safe havens. The dollar’s decline, however, puzzled some market watchers: a peace dividend would typically bolster the US currency, yet the greenback weakened against a basket of peers. Analysts in London noted that the surge in risk appetite overwhelmed any dollar-supportive fundamentals, with capital flowing into emerging-market assets and commodity-linked currencies. Brazil’s real firmed to R$5.04 per dollar, while the euro and yen also gained ground, reflecting a broad-based unwinding of geopolitical hedges.

Despite the market euphoria, a guarded undercurrent persists. The memorandum leaves the most intractable issue — Iran’s nuclear ambitions — to a further round of talks, and no text has been released publicly. Energy analysts warn that any breakdown in the diplomatic track could swiftly reignite the risk premium on crude, while currency strategists note that the dollar’s weakness may prove fleeting if Friday’s signing ceremony disappoints. For now, however, the mere prospect of the Strait of Hormuz returning to full commercial use has redrawn the near-term outlook, offering a tentative reprieve to a global economy that had been labouring under the strain of $100-a-barrel oil and the constant threat of escalation.