Dollar Retreats as Oil Prices Slide Amid Iran Pause

The US dollar retreated on Monday after the US paused its bombing in Iran, which led to lower oil prices and increased investor confidence ahead of a busy week of central bank meetings.

Against the yen, the US dollar dropped 0.2% to 163.53 yen, marking its sharpest daily decline since July 10. The euro rose 0.3% to $1.1404, and the pound increased 0.1% to $1.333.

Brent crude oil prices sank 6.5% to $90.45 per barrel after the US military temporarily halted its strikes in Iran. A senior Iranian official stated that Iran will halt its own attacks as long as the US does the same, following a China-led push to resume diplomatic efforts in Pakistan.

The dollar index remained flat at 101.27 ahead of the Federal Reserve's policy meeting on July 28-29. Fed funds futures now price a one-in-three chance of a 25-basis-point hike, up from a 16% probability a week ago.