Dollar Slips on Oil Price Drop, Rate Hike Bets Remain Strong

The US dollar fell on Friday due to easing oil prices, but it remains poised for its second consecutive weekly gain as bets on interest rate hikes continue to rise.

Oil prices have decreased by more than 1% after the potential for a truce between the US and Iran outweighed supply concerns from attacks by Houthi fighters against Saudi Arabia. Despite this, global oil prices remain above $100 per barrel, putting upward pressure on inflation.

Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut, said that 'we've had a pretty aggressive rally in the dollar over the last couple of days and maybe it's a little stretched.' He added that the dollar is not weakening materially today but rather taking a breather due to a combination of factors.

The dollar index fell 0.34% and was on track for its biggest daily percentage drop since September 3, reaching 100.95. Expectations for a rate hike from the Federal Reserve at its October meeting stood at about 66%, up from about 58% a week earlier.