27.07.202601:09:59UTC+00Dollar Weakens as US-Iran Hostilities Pause

The dollar index slipped to around 101.2 on Monday, giving back part of last week’s advance as oil prices fell. The pullback in crude followed a pause in hostilities between the US and Iran over the weekend, which helped ease worries about potential supply disruptions and renewed inflation pressures.

The US halted its nearly two-week campaign of strikes against Iran starting late Friday, without a formal public announcement. Tehran, for its part, declared an end to its retaliatory military actions and held talks with Oman regarding security in the Strait of Hormuz, a key chokepoint for global oil shipments.

At the same time, investors are turning their attention to this week’s Federal Reserve policy meeting, where officials are widely expected to keep interest rates on hold. Still, some market participants see a possibility that the Fed could move as early as this meeting if it judges that the latest inflationary pressures warrant a response.

Markets are also bracing for advance Q2 GDP estimates and PCE inflation data, alongside earnings reports from major US corporations, to gain a clearer read on the underlying strength and trajectory of the US economy.