Geopolitical de-escalation between the US and Iran drives the USD lower, though caution persists over Red Sea supply risks.
The US Dollar Index (DXY) fell to around 101.20 during Asian trading on Monday, extending losses after a weekend pause in US-Iran military strikes. The decline follows 13 days of escalating conflict, which had previously supported the Greenback as a safe-haven asset.
Prior to the halt, the DXY had posted minor losses in the previous session, reflecting investor unease over prolonged tensions. Markets remain wary of potential supply disruptions after Iran-backed Houthis claimed attacks on Saudi facilities in the Red Sea. Reports indicate the US paused strikes due to dwindling interceptor supplies and limited remaining targets.
Investors are now focused on this week’s Federal Reserve meeting, where rates are expected to remain steady before potential hikes in September. Key economic data, including Q2 GDP and PCE inflation, will also shape market sentiment.