Most Asian currencies traded in narrow ranges on Wednesday, as investors weighed conflicting signals surrounding the Middle East conflict, while the Australian dollar edged lower after softer inflation data.
The US Dollar Index edged down 0.1% in Asian trading on Wednesday. US Dollar Index Futures also traded 0.1% lower as of 01:41 ET (05:41 GMT).
Get premium insghts on Asian FX markets with analyst comments via InvestingPro
Israel attacks Tehran despite Trump's negotiations claims Sentiment remained cautious after media reports said Israel struck Iran’s capital Tehran, even as the United States signalled potential diplomatic progress.
Reports said Washington had sent Iran a 15-point plan aimed at ending the war, raising hopes for a ceasefire.
U.S. President Donald Trump said on Tuesday that Washington was “in negotiations right now” with Iran, adding that Tehran was “talking sense” and appeared eager to reach a peace deal.
However, Iranian officials have denied that any talks were taking place, underscoring uncertainty in markets.
"Ultimately we continue to think that negotiations will be very difficult, and hence our message to clients in Asia is to look to engage in some additional hedges if better levels in markets allow and/or reduce some risk as we head into the weekend," MUFG analysts said in a note.
Asia FX struggles for direction; Australia CPI in focus Currency moves were muted, with the dollar holding firm on safe-haven demand. Oil prices slipped sharply on Wednesday, with Brent crude falling below $100 per barrel.
Lower oil prices typically support Asian currencies by easing inflationary pressures and reducing import costs for energy-dependent economies, although the impact was limited by ongoing geopolitical risks.
The Japanese yen's USD/JPY and the South Korean won's USD/KRW pair were largely muted.
The Chinese yuan's onshore pair USD/CNY also traded flat, while the Singapore dollar's USD/SGD edged up 0.2%.
The Indian rupee's USD/INR pair ticked down 0.1% to 93.92 rupees, just below record highs of 94.14 rupees hit earlier this week.
The Australian dollar's AUD/USD pair weakened 0.3% after data showed consumer inflation eased to 3.7% year-on-year in February, down from 3.8% in January, while underlying inflation remained steady.
The data reinforced expectations that the Reserve Bank of Australia will remain cautious on policy, with markets anticipating a prolonged pause and limited scope for near-term easing.
