Oil Price Plunge Cools Rate-Hike Bets, Dollar Weakens Ahead of Central Bank Meetings

The US dollar weakened against major currencies on Monday as crude oil prices plummeted, tempering expectations for aggressive interest rate hikes by central banks ahead of key policy decisions.

Brent crude futures fell over 3% in early trading, extending a recent decline driven by concerns over global demand and potential oversupply.

The drop in energy prices directly influenced market pricing for central bank policy, easing inflationary pressures and reducing the urgency for tighter monetary policy.

As a result, traders now price in lower odds of a 50-basis-point rate hike from the Federal Reserve at its meeting this week, with smaller 25-basis-point move increasing in likelihood.