Dollar Retreats Amid Easing Middle East Tensions and Lower Oil Prices
The US dollar retreated against major peers on Monday as diplomatic signals in the Middle East eased inflation anxieties and reduced safe-haven demand for the greenback.
A sharp drop in crude oil prices triggered a decline of 0.3% in morning trading, causing investors to rotate back into risk-sensitive currencies such as the euro.
The euro led gains among major currencies, rising 0.3% to trade near $1.1440, while sterling edged 0.1% higher on expectations that the Bank of England will maintain a gradual easing approach.
In Asia, the Japanese yen strengthened 0.2%, pushing the USD/JPY pair down toward 163.4 yen - its lowest level against the greenback in over two weeks.
The global currency shift was triggered by a 5% plunge in oil prices after Washington paused its military campaign against Iran and Tehran agreed to suspend retaliatory strikes.
Lower commodity prices led money markets to dial back short-term interest rate projections for the US Federal Reserve ahead of its two-day policy meeting concluding on Wednesday, with implied probabilities for a 25-basis-point rate hike dropping to 33.7% from 37.4% late Friday.