ING analysts Chris Turner, Frantisek Taborsky and Francesco Pesole note that confirmation of a US-Iran ceasefire and the reopening of the Strait of Hormuz have pressured the Dollar as energy prices fall and risk assets rally. They highlight that seven G10 central banks meet this week and argue Wednesday’s Federal Reserve decision could cap further DXY losses near the 99.00/99.15 area.

Fed meeting seen capping DXY losses

"News of a US-Iran ceasefire and, more importantly, news that the Strait of Hormuz is set to reopen have seen energy prices drop back to early March levels and equities enjoy a decent rally around the world."

"The bigger reaction could come at the short end of yield curves, where central banks have had to clear up the inflationary mess left by the energy spike in April and May."

"The biggest focus this week, however, will be on Kevin Warsh's first meeting as Fed Chair."

"The market clearly expects a less dovish set of communications (with an easing bias and expected 2026 rate cut removed), but we suspect he will have to talk tough on inflation to avoid upsetting the long end of the bond market."

"Today's DXY drop has been quite modest so far."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)