United States Dollar Index weakens below 100.00 as Trump says new Iran talks would begin Monday

The US Dollar Index (DXY), a benchmark of the USD's strength relative to six major currencies, slipped below the 100 mark on Monday amid improved risk sentiment. This largely occurred after President Donald Trump announced that Iran talks would commence on Monday, following a canceled attack on the country. The US President also hinted at a possible agreement to reopen the Strait of Hormuz, while vowing to continue efforts to dismantle Iran's nuclear program.

This positive development could negatively impact the DXY, a safe-haven currency, against its global rivals. Traders are eagerly awaiting the US ISM Manufacturing PMI release later on Monday, which may provide further clues to the economic health. In the meantime, upcoming nonfarm payrolls data on Friday could offer additional insights, with economists predicting a 91,000 increase in July jobs and an unemployment rate of 4.3%.

The Federal Reserve maintained interest rates during their July meeting, with markets now pricing in a 64.7% probability of a September rate hike, down from 77% pre-Fed meeting. Analysts at Commerzbank predict that the Dollar will face renewed pressure once geopolitical risks lessen, stating that the Fed's "rate hike expectations are unlikely to be met." Consequently, the weakening of the USD could weaken the DXY even further.