Dollar Softens as Oil Prices Plunge Amid Middle East Conflict Pause
The US dollar softened against major currencies on Monday as oil prices plummeted following a pause in Middle East conflict.
Brent crude futures fell by 8% to $89 per barrel after the US military temporarily halted its strikes against Iran, while Tehran said it would also halt attacks if the US maintained the pause. This raised hopes for renewed diplomatic efforts to de-escalate the conflict and bolstered risk appetite ahead of a busy week of central bank meetings.
The euro rose by up to 0.4% but pared gains to trade around flat at $1.1371, while the US dollar slipped 0.1% to 163.74 yen.
With the Federal Reserve's July 28-29 policy meeting approaching, traders see a roughly 33% chance of a quarter-point Fed rate hike on Wednesday, down from 37% at the end of last week but double the probability seen a week ago, according to CME Group's FedWatch tool.