Dollar Dips on Cooling Oil Prices, Still Poised for Second Straight Weekly Gain

The US dollar fell on Friday as oil prices cooled, but was poised for its second consecutive weekly gain due to rising expectations of more aggressive monetary policy from the Federal Reserve.

Crude prices dropped over 1% after a potential truce between the US and Iran outweighed supply concerns from attacks by Houthi fighters against Saudi Arabia. Despite remaining above $100 per barrel, oil's upward pressure on inflation eased, contributing to the dollar's decline.

Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut, noted that the dollar had been experiencing a 'pretty aggressive rally' over the past couple of days. He attributed this trend to growing rate hike bets and rising US Treasury yields, which have increased market expectations for more aggressive monetary policy.

The dollar index, measuring the dollar against five other currencies, fell 0.34% to 100.95, its biggest daily percentage drop since September 3. The euro was up 0.2% at $1.1402 but on pace for a third consecutive weekly decline.