DXY Drops to 100.82, Pause in US-Iran Conflict Pressures Dollar
The US dollar weakened in trading on Monday (July 27th), after tensions between the US and Iran eased over the weekend. The dollar index fell to around 100, erasing some of last week's gains as oil prices declined and concerns about supply disruptions began to ease.
The United States temporarily halted its attack campaign against Iran on Friday night, without an official announcement. Meanwhile, Tehran stated that it had ended its military retaliation and was in talks with Oman regarding the Strait of Hormuz, one of the world's most important energy routes.
The dollar also weakened against a basket of major currencies. The Bloomberg Dollar Spot Index fell 0.2%, while the 10-year US Treasury yield fell four basis points to 4.64%. USD/JPY weakened 0.2% to 163.55, while AUD/USD rose 0.3% to 0.6998, EUR/USD strengthened 0.3% to 1.1407, and GBP/USD added 0.2% to 1.3356.
However, the market has not completely abandoned geopolitical risks. Westpac analyst Richard Franulovich believes the dollar started the week under pressure as the US administration appears to be paving the way for a resolution to the Iran conflict. However, he cautioned that room for a sentiment rally remains limited as oil flows have not yet returned to normal and risks ahead of the Red Sea remain looming.
In terms of market impact, a weaker dollar could provide strength for other major currencies, gold, and risk assets in the short term. However, market focus now shifts to the Federal Reserve meeting, second-quarter GDP data, PCE inflation, and the earnings reports of major US companies. If the Fed signals a hawkish stance or inflationary pressures increase again, the US dollar could potentially regain support. (asd)*
Source: Newsmaker.id
