The dollar index hovered near 98 on Tuesday after falling in the previous session, as markets weighed the prospects for a longer-term peace agreement between the US and Iran that could diminish demand for safe-haven assets. Vice President JD Vance is scheduled to once again lead the US delegation in Pakistan, while Tehran is also reportedly dispatching envoys after earlier signaling it would not take part in further negotiations.
At the same time, President Donald Trump said he is unlikely to extend the current truce if no agreement is reached before it expires this week, adding that the Strait of Hormuz will remain closed until a deal is concluded.
Oil prices retreated, alleviating inflationary pressures and tempering expectations for more aggressive central bank tightening. The Federal Reserve is widely expected to leave interest rates unchanged this month and to keep policy on hold through 2026.
