Dollar Halts Its Slide: The greenback found its footing on Tuesday, arresting its 0.3% decline from the previous session. Investor optimism regarding an immediate deal to end the war and reopen the crucial Strait of Hormuz was chilled by fresh US defensive strikes on Iranian targets and sobering diplomatic commentary.

A “Few Days” Dynamic: US Secretary of State Marco Rubio tempered the market’s enthusiasm by stating that negotiating a final treaty with Tehran could “take a few days.” This reminder of a prolonged timeline forced major pairs to pare their previous gains, with the Euro easing to $1.163 and the British Pound slipping 0.2% to $1.347.

Oil Claws Back Losses: Brent crude futures rebounded by 1.5% to $97.76 per barrel following news of the military strikes, recovering slightly from Monday’s massive 7% plunge. Analysts warn that even with a swift resolution, supply chains and insurance premiums will take months to normalize, preventing energy prices from dropping to pre-war levels anytime soon.

USD/JPY Knocks on Tokyo’s Door: The renewed dollar resilience pushed the pair up 0.2% to 159.21 yen. Traders are on high alert as the price edges back toward the critical 160.00 “line in the sand”—the exact level that triggered billions in direct currency interventions by Japanese authorities in late April.

Yields Catch Up: US Treasury yields fell sharply as traders returned from the Memorial Day holiday, reacting late to the broader global bond market’s reaction to potential peace. However, macro strategists maintain that resilient US economic growth and AI-driven inflation pressures will keep the Federal Reserve’s stance firmly hawkish.