FX.co ★ Dollar Pares Gains

The dollar index trimmed its initial gains and traded around 98 on Monday, hovering near its lowest levels since 2022. This shift occurred as traders pulled back from some risk-averse positions while closely monitoring the escalating situation between Israel and Iran. The two countries continued to exchange attacks for the fourth consecutive day, despite international calls for de-escalation. Investors are also observing the G7 summit closely, anticipating potential responses to various global crises, including those in the Middle East and Ukraine, and ongoing trade tensions. Additionally, attention is shifting towards what promises to be an eventful week in monetary policy, with the Federal Reserve in the spotlight. While the Fed is expected to maintain the federal funds rate at its current level, market participants will eagerly dissect the central bank's updated economic projections for insights into how policymakers perceive the wider economic effects of President Trump's policies.