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Dollar slips as de-escalation hopes on Iran weigh on USD index
Investors also leaned toward a firmer rate path for the ECB, with markets pricing a 90.0% chance of a September deposit rate increase.
The US dollar kept falling as hopes of de-escalation around Iran surfaced after President Donald Trump said Iran is seeking a deal, a shift traders have repeatedly associated with a pattern of escalation followed by de-escalation since April, Action Forex said.
Risk sentiment also turned into headwinds for the USD index, with the S&P 500 rising and Brent crude pulling back from local highs, while Treasury bond yields declined.
The article said the European Central Bank is expected to remain more hawkish, with futures pricing 50.0% odds of two rounds of monetary tightening in 2026 and a 90.0% probability the ECB will raise its deposit rate in September. It added that the ECB’s June minutes noted inflation is expected to stay above the 2.0% target in the first half of 2027 even after three tightening moves by then.
In commodities and FX, Brent stabilized above $76 per barrel despite a slowdown in traffic through the Strait of Hormuz, while USDJPY weakened as selling pressure built and Japan’s pension fund push was cited as more effective than verbal intervention, Action Forex said.
Latest closeWTI crude $71.84 ▼2.3%|Brent $75.98 ▼2.6%|S&P 500 7,543.64 ▲0.8%