Investors shift from the dollar after Iran halts attacks, easing geopolitical tensions amid Fed rate hike expectations.
The dollar retreated from near two-month highs after Iran announced the end of its strikes on Israel, reducing safe-haven demand. The move followed Friday’s stronger-than-expected U.S. jobs data, which reinforced bets on Federal Reserve rate hikes this year.
U.S. nonfarm payrolls surged by 172,000 in May, far exceeding forecasts and signaling labor market resilience. The euro rose slightly to $1.1539, while the pound climbed to $1.3362, though both remained near multi-week lows.
Markets now price in a higher probability of two 25-basis-point Fed rate hikes in 2024, driven by persistent labor strength and energy price pressures.