The U.S. Dollar Index is down by 0.27% on Monday as improving sentiment around a potential U.S.-Iran deal reduces demand for the greenback as a safe-haven asset. Hopes for a deal have also slightly reduced rate hike expectations, further weighing on the currency.
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Lower Brent crude oil (BZ) prices are also indirectly contributing to the weakness. With lower oil prices, inflation expectations drop, easing pressure on the Fed to raise rates and reducing the yield advantage of U.S. debt.
Trump Signals Patience as Dollar Swings Continue
However, a U.S.-Iran deal is still far from guaranteed. Over the weekend, President Trump said he wasn’t in a rush to secure an agreement and emphasized that both sides should “take their time and get it right.”
The U.S. Dollar Index has been volatile since the beginning of the year amid an escalation in geopolitical tension and shifting expectations around inflation and interest rates. The index fell to a year-to-date low of 96.22 in late January before rebounding above 100 in late March and is currently trading at 98.98.