Dollar Stalls on Hawkish Central Banks and Oil Price Pressures

The dollar struggled to gain traction despite increased expectations of a Federal Reserve rate hike in September. According to traders, there's now a 57% chance that the Fed will raise rates this month.

A hot inflation reading from Friday's U.S. jobs report would likely seal a September hike and support a stronger dollar, but a cooler reading could weaken its case and make it vulnerable to a dovish Fed repricing.

Oil prices are still elevated, putting pressure on global inflationary pressures, which is why many central banks are seen tightening policy in tandem. The European Central Bank is expected to raise rates to 2.75% on Thursday and futures imply another hike to 3.0% by December.

The yen rose more than 0.2% against the dollar on Monday as traders lean towards a September rate hike from the Bank of Japan, with a 60% probability of another move by December.