Dollar Weakens Against Global Currencies Amid Middle East Tensions

The US dollar has weakened against major global currencies, hovering near multi-month lows. This comes after traders scaled back expectations of near-term monetary tightening due to the threat of an escalation in the Middle East.

The euro traded at USD 1.1581 in early Asian trading, not far from a two-month high of USD 1.1614 reached on Monday (17/8). Sterling stood at USD 1.3548, slightly below the three-month high reached in the previous session.

Market sentiment remains fragile due to ongoing disruptions around the Strait of Hormuz and the deadlock in negotiations to end the US-Iran conflict. This has kept energy prices elevated, adding to global inflationary pressures.