Around 18:55 GMT, the greenback had slipped 0.31% against the euro to 1.1195 dollars per euro and was down 0.11% against the British pound at 1.3405 dollars per pound.
Positions remain wide apart, but according to Iran, talks are “intense” in an effort to prevent a renewed flare-up with the United States.
Tehran said it was ready to reopen the strategic Strait of Hormuz — at the heart of the conflict — in two days instead of the initial seven, subject to conditions.
These developments sent oil prices tumbling on Monday, with Brent crude from the North Sea — the international benchmark — giving up nearly 8%.
Moreover, the drop in crude prices, denominated in dollars, automatically reduces demand for greenbacks to buy barrels.
The dollar had so far been supported by its status as a safe-haven asset and by expectations of a Federal Reserve rate hike amid inflation risks tied to the war.
Meanwhile, traders are closely watching the United States midterm elections scheduled for Tuesday.
“Bookmakers assign to the Democrats a 70% to 72% probability of taking both the House and the Senate,” explains Chris Turner, an analyst at ING.
“Such a scenario could weigh on the dollar because “it would likely lead to a debt-ceiling impasse, a prolonged paralysis of the government next year and could prompt President Trump to pursue an even more interventionist foreign policy agenda,”,” notes the analyst.
Market participants are also awaiting the official October U.S. employment data, due to be released on Friday.
Solid figures could “support the scenario of a Fed rate hike in December”, notes Kevin Ford of Convera.
Net job creations had surprised on the weak side in September.
