The US Dollar Index slipped to 101.2 from a 14‑month high of 101.8 reached on June 24, as easing inflation pressures led markets to scale back expectations for the size of future Federal Reserve rate hikes.
At the same time, the United States and Iran were preparing to resume peace talks after pausing their recent hostilities. This development supported the steady increase in tanker traffic from the Persian Gulf that followed the memorandum of understanding signed by both countries, helping crude oil prices retreat toward their pre‑war levels.
Previously, higher energy prices had prompted several FOMC members to signal the likelihood of multiple rate hikes this year, in line with signs of firming core inflation. The dollar’s earlier strength had also reflected evidence of a resilient labor market, which will face a fresh test with this week’s US jobs report.
Meanwhile, hawkish shifts in monetary policy have been moderated across other G10 central banks, including the ECB and the BoJ, both of which have already raised interest rates to counter accelerating inflation.
