The U.S. dollar edged lower during Monday’s Asian trading session, ending a three-day winning streak. Meanwhile, Brent crude climbed above $90 per barrel as tensions between the United States and Iran continued to escalate.

Dollar Eases as Risk-Sensitive Currencies Recover

The U.S. Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.1% to 100.69.

The euro gained 0.1% to $1.1444 ahead of the European Central Bank’s upcoming meeting. The British pound rose to $1.3463, while the Australian and New Zealand dollars advanced to $0.6996 and $0.5858, respectively.

According to market analysts, the move primarily reflected renewed demand for risk-sensitive currencies rather than a significant weakening of the U.S. dollar.

Brent Crude Tops $90 as Tensions Escalate

Brent crude futures jumped 2.6% to $90.37 per barrel after the United States said it had carried out a ninth consecutive night of attacks against Iran.

The announcement followed reports that at least two U.S. military personnel had been killed in Jordan, increasing concerns that the conflict could spread and disrupt global energy supplies.

Higher oil prices could also add to inflationary pressure, potentially affecting the Federal Reserve’s monetary policy outlook.

Markets Still Expect the Fed to Hold Rates

Investors continue to expect the Federal Reserve to leave interest rates unchanged at its July 29 meeting.

Based on the data provided, Fed funds futures are pricing in an 85.6% probability of no rate change, up sharply from 61.5% one month earlier.

However, several Fed officials, including Cleveland Fed President Beth Hammack, have argued that interest rates may need to rise further if inflation remains persistently high.

Yuan and Cryptocurrencies Edge Higher

The U.S. dollar fell 0.1% to 6.772 yuan in offshore trading after China kept its benchmark lending rates unchanged for a 14th consecutive month.

In the cryptocurrency market, Bitcoin gained 0.2% to $64,637.89, while Ether rose 0.4% to $1,872.71.

Conclusion

The U.S. dollar is undergoing a modest correction after three consecutive sessions of gains, while investors show renewed interest in risk-sensitive assets.

However, Brent crude’s move above $90 per barrel indicates that geopolitical risks remain a major market driver. If the U.S.–Iran conflict continues, energy prices, inflation expectations, and the outlook for Federal Reserve interest rates could remain highly volatile.

This article is based on the information provided and is intended solely for market commentary. It does not constitute investment advice.

Source: Reuters