A fragile calm reigned across currency markets on Thursday as traders kept their ‌eyes fixed on whether the ceasefire between the U.S. and Iran would hold, a day after its announcement sent the dollar tumbling across the ​board.

The deal appeared to be on thin ice, as Israel bombed more targets in Lebanon, and there was no sign Iran had ​lifted its blockade ​of the Strait of Hormuz, which has caused the worst disruption to global energy supplies in history.

Iranian negotiators were expected to set off later on Thursday for Pakistan for the first peace talks of the ⁠war, but Tehran said there would be no deal as long as Israel was striking Lebanon.

President Donald Trump said all U.S. ships, aircraft, and military personnel would stay in place in and around Iran until it fully complied with a deal.

The uncertainty left currency markets on edge.

The euro was up 0.16% at $1.1680. It had gained 0.6% on Wednesday, but retreated late ​in the day having ‌touched a one-month high ⁠of $1.1721 earlier in the ⁠session.

Sterling similarly was 0.1% higher at $1.341, after gaining 0.77% on Wednesday, but retreating from as high as $1.348.

Meanwhile, the Japanese yen lost ​some ground, with the dollar up 0.17% at 158.88 yen, having briefly dropped below ‌158 on Wednesday.

With the Strait of Hormuz closed, "the entire ceasefire remains tenuous," said Derek ⁠Halpenny head of research global markets EMEA at MUFG. But, he added, "while the U.S. dollar has rebounded, the moves in general have been modest."

He said the fact that further talks scheduled in Pakistan were still going ahead was keeping any retracement of Wednesday's moves in check.

There are also a few bits of economic data in the mix around the world, but they are of secondary importance to war headlines.

Japan's consumer confidence worsened in March for the first time in three months, a government survey showed on Thursday, adding to a recent string of data pointing to the potential economic hit from the Middle East war, which would complicate the Bank of Japan's rate-hike decision. The yen showed ‌little reaction to the data.

Speaking in parliament, BOJ Governor Kazuo Ueda said real interest ⁠rates were clearly negative and were keeping the country's financial conditions accommodative.

The U.S. ​is set to release February personal spending and the PCE data on Thursday, though as this covers the period before the war, it is unlikely to have a major effect on markets.

Other currencies were also broadly steady. The Swiss franc was a whisker firmer ​at 0.7901 francs ‌per dollar and steady on the euro at 0.9235 francs to the common currency.

The Australian ⁠dollar was steady at $0.7045.

(Reporting by Satoshi Sugiyama ​in Tokyo and Alun John in London Editing by Shri Navaratnam, Kim Coghill and Gareth Jones)