Dollar Retreats as Geopolitical Tensions Ease

Selling pressure intensified against the euro and yen as investors recalibrated positions, anticipating that a resolution in the Middle East would alleviate volatility in global oil markets. Despite a surge in U.S. Treasury yields following strong employment figures last Friday, the currency struggled to maintain its defensive premium.

European markets meanwhile turned their attention to the upcoming European Central Bank meeting. Analysts anticipate a 25 basis point rate increase, a move that could signal a broader tightening cycle. With key U.S. inflation data arriving later this week, market participants remain cautious, looking for clearer signals on whether the Federal Reserve will proceed with further hikes before the year concludes.