As peace talks between the U.S., and Iran fell apart and the American Navy prepared to blockade Iranian ports, the safe-haven greenback advanced. However, the dollar lost some of its gains as the trading session progressed.

Both currencies have recovered from their previous lows. The Australian dollar, which is more risky, was down 0.5% at $0.7037. Meanwhile the New Zealand Dollar was off 0.3% to $0.5824.

Donald Trump said on Sunday that the U.S. Navy will begin blockingading Strait of Hormuz if talks with Iran fail to produce a peace agreement, putting at risk a fragile ceasefire of two weeks. The U.S. Central Command announced that U.S. Forces would start implementing the blocking of all maritime traffic into and out of Iranian ports at?10 am. ET (1400 GMT), Monday.

In a report, analysts at BNP Paribas stated that they expected the negotiations to be long and difficult, but believed this weekend's discussions would mark the beginning of a process, which would result, at least, in some stabilisation of situations. This view was misplaced.

BNP?added "we wouldn't be surprised if negotiations were restarted fairly quickly, given the current timeline for the ceasefire."

The Hungarian forint soared as veteran nationalist Viktor Orban, who had been in power for 16 years, lost his position to the centre-right Tisza Party in Sunday's elections.

The dollar rose 1.7%, to 314.55 - the highest level since January. The euro jumped 2% to the highest level in three years.

Goldman Sachs analysts wrote in a recent report that "Hungarian assets reacted positively" to the news, partly because it implied that EU funds inflows will be?fully released relatively quickly." "EU funds in the current budget for 2021-27 account for approximately 3% of GDP each year. Nearly half are currently frozen."

The?U.S. The dollar index, which measures greenback strength against a basket six currencies, fell 0.1% to 98.999. It is now near its highest level since April 7.

The U.S. Dollar was up 0.3% against the yen at 159.68, as the yields on Japan’s benchmark 10-year government bond jumped 5.5 basis points to 2.49%. This is the highest level for almost 30 years.

The Bank of Japan's Governor Kazuo ueda will give a speech later today. This may reveal how the central banks will respond to the energy shock brought on by the Iran war. However, the prospects of a rate increase at the next meeting that ends?on the 28th of April are dimming.

Nomura analysts wrote that "the risk of policy mistakes is relatively high in Japan, Europe and the United States. This means money will return to USD assets due to a lack of better options."

(source: Reuters)