Dollar Holds Steady Amid Middle East Tensions and Fed Speculations

The U.S. dollar remained stable on Monday, following a slight weekly decline, as investors eagerly anticipated developments in Middle East peace talks and imminent U.S. jobs data. These factors are expected to influence the Federal Reserve's future monetary policy decisions.

Last week, the dollar index, which tracks the currency against six major peers, experienced a decline amid expectations of a potential resolution between the United States and Iran to reopen the Strait of Hormuz. This crucial oil route has been closed, escalating oil prices and aggravating inflation concerns that may prompt the Fed to consider a rate hike this year. However, escalating tensions between the U.S. and Iran, coupled with limited new information on peace negotiations, have led currency markets into a cautious waiting period.

While the dollar slightly fluctuated, analysts expect it to weaken if the Strait reopens and oil prices stabilize. Market balance is further influenced by anticipated U.S. labor market data and upcoming comments from key Fed policymakers.

(With inputs from agencies.)