Asian currencies held ground against the dollar in early Asian trading, underpinned by a broader improvement in risk appetite. Markets largely dismissed escalating Middle East tensions after oil prices reversed course, a development that eased near-term inflation concerns, according to strategists at OCBC Group Research.

The greenback traded modestly softer overnight, reflecting the shift in sentiment. The dollar was little changed at 162.35 yen and flat at 1.2922 Singapore dollars, per LSEG data, suggesting the consolidation phase remains intact despite the geopolitical backdrop.

The decoupling of currency moves from headline geopolitical risk highlights how quickly markets have repriced energy-driven inflation expectations. With oil off its highs, central banks in the region gain breathing room to maintain accommodative stances or delay tightening cycles.

For investors, the steady dollar-yen and dollar-SGD levels signal a pause rather than a trend reversal. The next directional move likely hinges on U.S. data and whether the risk-on tone survives a week heavy with earnings and Fed speak.