Asian currencies weakened against the dollar in early trade as markets positioned themselves ahead of critical U.S.-Iran negotiations. President Trump expressed optimism about reaching a peace agreement with Iran, while an Iranian delegation arrived in Islamabad for talks scheduled this weekend. The currency movements reflect investor caution amid geopolitical uncertainty surrounding the Middle Eastern conflict.

The dollar gained 0.2% against the yen to 159.22 and rose 0.2% versus the won to 1,477.73, according to FactSet data. NAB's senior FX strategist Rodrigo Catril noted the U.S.-Iran cease-fire remains in place but fragile, highlighting the delicate balance of tensions that continue to influence regional currency markets and global risk sentiment among investors.

Currency traders remain focused on the outcome of weekend talks, with the Pakistani capital serving as the unexpected venue for these high-stakes negotiations. The positioning of Asian currencies suggests market participants are preparing for potential volatility depending on whether diplomatic progress emerges or tensions persist in the Middle Eastern conflict.