The dollar index slipped below 100 on Tuesday, retreating from a nine-week high after Iran and Israel agreed to halt attacks against each other, easing safe-haven demand for the greenback. President Donald Trump also noted that both parties were seeking an immediate ceasefire and that final negotiations were progressing.
Despite the pullback, the dollar held near multi-month highs against major currencies, as stronger-than-expected US employment data bolstered expectations that the Federal Reserve will raise interest rates by year-end. Futures markets are now pricing in around a 70% probability of a quarter-point hike in December.
Investors are also awaiting US CPI and PPI releases later this week for additional signals on the Fed’s policy trajectory. Meanwhile, the European Central Bank is widely expected to increase interest rates at its upcoming meeting.
