Dollar Drops on Iran Deal Hopes, All Eyes on Fed's Warsh
By Aboki Forex —
The dollar fell on Tuesday as optimism grew over a peace deal with Iran. Investors are now waiting for the Federal Reserve's policy meeting to end on Wednesday.
Details of the interim deal between the U.S. and Iran emerged. Donald Trump said it will prevent Iran from getting a nuclear weapon. A U.S. official added that the deal allows Iran to sell oil once signed.
Still, the greenback is trading near the top of its recent range against the euro and the Japanese yen. Energy prices are expected to stay high for months. That reflects worries that new Fed Chair Kevin Warsh could sound more hawkish at his first meeting.
Adam Button, chief currency analyst at InvestingLive, said: "The Fed decision may be keeping the dollar sellers at bay. There's a lingering sense in markets that Warsh is more of a hawk than he let on during confirmation."
The pullback in oil prices could ease price pressures over time. But inflation remains well above the Fed's 2% target. The Fed is widely expected to hold rates steady at 3.50% to 3.75%. It could also drop its easing bias from the policy statement. Fed funds futures traders now see a 61% chance of a rate hike by December.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.14% to 99.55. The euro rose 0.16% to $1.1609. The Japanese yen weakened 0.06% against the dollar.