The US Dollar Index has softened to approximately 99.70 during the Asian session on Monday. Trump announced that new discussions regarding Iran would commence on Monday, following his decision to cancel a scheduled military strike on the country. On Friday, attention will be focused on the US Non-Farm Payroll data. The US Dollar Index, an index of the value of the US Dollar measured against a basket of six world currencies, currently trades near 99.70 during the Asian trading hours on Monday. The DXY experiences a decline as risk sentiment improves. Traders prepare for the forthcoming release of the US ISM Manufacturing Purchasing Managers Index report, scheduled for later on Monday.

US President Donald Trump stated on Sunday that he had cancelled an attack on Iran and that discussions between the two parties would take place on Monday. Trump indicated that a potential agreement regarding the reopening of the Strait of Hormuz might be imminent, while also affirming his commitment to seeking a resolution to terminate Iran’s nuclear program. Expectations of a resolution between Washington and Tehran may weaken the US Dollar’s position as a safe-haven currency relative to its competitors in the short term. Attention will be focused on the US employment data released on Friday. This report may provide insights into the condition of the labour market.

Analysts anticipate a rise in Nonfarm Payrolls by 91,000 in July, with the Unemployment Rate expected to climb to 4.3% in that timeframe. In the event of outcomes that exceed expectations, this could serve to mitigate the losses of the DXY. The Federal Reserve maintained the interest rates at their current level during its July policy meeting last week. Markets currently reflect an approximate 64.7% probability of a US rate hike occurring in September, a decrease from the roughly 77% likelihood observed prior to the July Federal Reserve meeting, as indicated by the CME FedWatch tool.

Analysts at Commerzbank suggest that the Dollar may face renewed pressure following a de-escalation of tensions with Iran, as they assess that the Federal Reserve is “unlikely to raise rates as markets have priced in.” In their perspective, the alleviation of geopolitical risk would eliminate a significant pillar for the currency, rendering it more susceptible to letdowns regarding the trajectory of US interest rates.