Fed uncertainty tempers US dollar strength, says MUFG

The US dollar has edged lower, with Lee Hardman of MUFG attributing the move to fading geopolitical risk and a pullback in Brent crude below $90 per barrel.

Easing tensions in the Middle East and cheaper oil are weighing on energy-driven inflation expectations. As a result, the market-implied probability of a near-term Federal Reserve rate adjustment has declined modestly.

This dynamic is tempering the greenback’s recent strength, as less urgent inflation pressure reduces the case for tighter Fed policy in the immediate future.