Dollar Steadies Amid Ongoing Geopolitical Tensions
The US dollar stabilized on Monday after several days of losses, but the risks remain skewed towards further decline. Japan's finance ministry confirmed that it had purchased yen in conjunction with the US last week and is prepared to intervene again if necessary.
This possibility may limit any potential recovery for the greenback against the yen. Geopolitical developments are also contributing to this trend, as President Donald Trump hinted at resuming talks with Iran, which has reduced expectations of further escalation and limited safe-haven demand for the dollar.
The resulting decrease in oil prices could ease inflation concerns and soften expectations for monetary policy tightening, weighing on Treasury yields. Despite this, markets still anticipate an interest rate increase from the Federal Reserve at its next meeting, although this expectation has increased to a 35% probability from 18.5% a week earlier.