The dollar drifted in a narrow range on Monday as traders weighed ongoing US-Iran strikes against signs of diplomatic movement from Tehran. Currency markets stayed largely calm despite the geopolitical backdrop.
The dollar index, which measures the greenback against six major currencies, sat at around 100.72 to 100.76. It had pulled back slightly after a three-day safe-haven rally driven by Middle East fears.
US and Iran exchanged strikes for a ninth consecutive night. The conflict followed the collapse of an interim ceasefire agreement signed roughly a month ago.
JUST IN: Earlier today, despite an active U.S. military escort, Iran’s IRGC reportedly struck the Malta-flagged oil products tanker KAVOMALEAS in the Strait of Hormuz, according to UKMTO.
MarineTraffic last placed the tanker in the Persian Gulf, underway after departing Fujairah… pic.twitter.com/fZsq4KKi3z
— The Hormuz Report (@HormuzReport) July 20, 2026
Fighting has centered on control of the Strait of Hormuz, a key shipping lane for global oil supplies. The disruption has pushed energy prices higher and raised fears about inflation.
Brent crude briefly climbed above $90 per barrel before pulling back to around $88.16. Tehran later signaled it was open to negotiations based on national interests, cooling some of the market anxiety.
Nick Rees, head of macro research at Monex Europe, said markets have grown more used to the range of risks. He said volatility was likely to grind lower unless something caught traders off guard.
The British pound rose 0.13% to $1.3470 as Andy Burnham prepared to take over from Keir Starmer as Prime Minister. The change in Labour leadership drew attention from currency traders.
Markets responded positively to reports that Home Secretary Shabana Mahmood was set to be named Chancellor. She is widely seen as a centrist, and investors welcomed the prospect of a fiscally cautious figure running the Treasury.
ING’s head of global markets Chris Turner warned that the UK’s tight fiscal position means the new cabinet may need to turn to tax increases to fund policy plans.
The euro was little changed at $1.1441. Traders are positioning ahead of the European Central Bank meeting on Thursday, where rates are expected to hold at 2.25%.
Fed funds futures put an 85.6% probability on the Federal Reserve holding rates at its July 29 meeting. That is up from a 61.5% chance just a month ago.
Cleveland Fed President Beth Hammack said Friday that rates may still need to rise if inflation remains persistent. Her comments add to a growing debate within the Fed ahead of Chair Kevin Warsh’s second meeting.
The dollar also dipped 0.17% against the Chinese yuan after China held its benchmark lending rate steady for a 14th straight month.
The post Dollar Index Steady as US-Iran Strikes Continue and Fed Rate Decision Approaches appeared first on CoinCentral.
