27.07.202613:29:03UTC+00Dollar Pares Most Losses

The dollar index trimmed earlier losses to trade roughly flat around 101.4 on Monday, hovering near a one-month high as developments in the Middle East continued to steer market sentiment. The United States suspended its nearly two-week campaign of strikes against Iran late on Friday, and Tehran, in turn, halted its retaliatory military operations while holding talks with Oman on securing safe passage for shipping through the Strait of Hormuz.

These moves prompted a pullback in oil prices, easing fears of further supply disruptions and a renewed burst of inflation. In turn, investors pared back expectations for additional Federal Reserve tightening. The central bank is widely expected to keep the federal funds rate unchanged at its upcoming meeting, though markets still see roughly a 33% chance of a hike. Looking further out, a September increase remains the base case, with traders assigning nearly an 80% probability to such a move.