The U.S. dollar weakened against the euro and yen on Monday as oil prices dropped following a pause in U.S. bombing in Iran. Brent crude futures fell 8%, down $7.78 to $89 a barrel, after the U.S. military temporarily halted its two-week-long strikes, according to livemint.com. The euro gained up to 0.4% before settling near $1.1371, while the dollar slipped 0.1% to 163.74 yen.
The dollar’s softer tone came amid increased risk appetite among traders, who reacted to the U.S. military’s decision to pause airstrikes in the Middle East. This development eased tensions and led to a significant drop in oil prices. Market participants are also preparing for a busy week of central bank meetings, with traders assigning a one-in-three chance to a 25 basis points Federal Reserve rate hike this week, according to livemint.com.
The decline in oil prices and the dollar’s retreat reflect the sensitivity of global markets to geopolitical events and U.S. monetary policy signals. Brent crude’s 8% drop marks one of the largest single-day declines recently, impacting currencies and risk sentiment worldwide. The euro’s brief rise against the dollar highlights shifting investor preferences amid easing Middle East tensions and anticipation of central bank actions.
The dollar’s movement and oil price drop come ahead of key central bank meetings this week, which will be closely watched for policy signals. Brent crude futures settled at $89 a barrel following the U.S. military’s pause in Iran strikes, a factor that contributed to the dollar’s decline against major currencies, according to livemint.com.