Dollar Trims Weaknesses, Focus on FOMC
The US Dollar Index pared most of its losses and held steady around 101.4 in Monday's trading. This position remains near its highest level in a month.
The dollar's movement was influenced by developments in the Middle East conflict. The United States halted attacks on Iran on Friday night after a military operation that lasted nearly two weeks.
Iran subsequently halted retaliatory attacks and held talks with Oman regarding shipping security in the Strait of Hormuz. This news lowered oil prices and eased concerns about energy supply disruptions.
The decline in oil prices helped reduce the risk of a spike in inflation. This condition has led investors to lower expectations that the Federal Reserve will soon tighten its monetary policy.
The Fed is expected to maintain interest rates at its next meeting. However, the market still sees a roughly 33% chance that the US central bank will raise rates.
For September, the probability of a rate hike is estimated at nearly 80%. As long as these expectations remain high, the dollar has the potential to remain strong even as Middle East tensions begin to ease.
Source: Newsmaker.id
