HONG KONG: The dollar retreated against most major currencies on Wednesday after the U.S. signalled it may ​be nearing a ⁠deal with Iran, while the yen continued to drift weaker toward ‌levels that have previously drawn intervention from Tokyo.

President Donald Trump said he would briefly pause an operation ​to help escort ships through the Strait of Hormuz, citing progress toward a comprehensive agreement ​with Iran.

That ​came shortly after U.S. Secretary of State Marco Rubio said on Tuesday that the United States has achieved its objectives in its military campaign ⁠against Iran, and was "not cheering for an additional situation to occur."

U.S. oil futures fell on Wednesday morning by over $2 following Trump's remarks, with U.S. West Texas Intermediate softening to near $100 per barrel.

"The signals sent from the United States appear to offer reassurance ​that it's ‌not interested in ⁠renewing hostilities," said Kyle ⁠Rodda, senior analyst at Capital.com.

However, this isn't all good news with oil still trapped ​and the Strait still closed, he added. "That suggests upward pressure ‌on oil will persist, which could cause a ⁠headache for the markets once again down the line."

The euro stood at $1.1714 and sterling traded at $1.35685, both up roughly 0.2% so far on the day.

The Australian dollar fetched $0.7208, up nearly 0.4% in early trade, and the New Zealand dollar was up 0.3% at $0.5905.

The dollar index fell 0.01% to 98.299.

The markets are now gearing up for non-farm payrolls release later this week, which will serve as a test whether the economy remains resilient enough to keep the Federal ‌Reserve's monetary policy on hold, or whether a softening labour ⁠market could revive the case for interest rate cuts.

Against ​the yen, the dollar traded at 157.62 yen, down 0.17% from late U.S. levels, still well above last week's intervention low despite easing oil prices.

The move suggests the ​recovery has more ‌to do with the absence of any follow-up intervention from ⁠Japanese authorities, analysts at IG said ​in a note.

(Reporting by Jiaxing Li; Editing by Sam Holmes)