Oil prices turn lower as Bessent says U.S. may have Iran deal "today or tomorrow"

Investing.com -- Sterling fell on Monday while the euro slipped, as the dollar proved resilient despite confirmation of rare joint U.S.-Japan currency intervention and a softer oil backdrop.

As of 03:55 ET (07:55 GMT), GBP/USD fell 0.15%, to 1.3462. EUR/USD dipped 0.03%, to 1.1526.

The dollar’s ability to hold its ground surprised some traders after U.S. and Japanese authorities confirmed coordinated selling of dollars to support the yen, with Tokyo estimated to have offloaded $70-80 billion over the past three days.

"In theory, the dollar should be broadly weaker today," said Chris Turner, global head of markets at ING, citing the intervention and lower oil prices following reports that U.S. President Donald Trump prefers negotiation over military action with Iran. "The case for a sustained sell-off in the dollar has yet to be made," Turner added.

The dollar’s resilience traces to stubborn Federal Reserve rate-hike expectations. Markets briefly priced fewer than 10 basis points of September tightening following Fed Chair Kevin Warsh’s press conference last week before hawkish repricing pushed that back to 16-17 basis points.

U.S. 30-year Treasury yields hold above 5.20% and the 30-year mortgage rate has risen to 6.75%. Analysts said the Fed’s path hinges on this week’s jobs data, JOLTS openings Tuesday, ADP Wednesday and Friday’s non-farm payrolls, where consensus clusters around +75,000-80,000.

ING’s Turner said that figure is "probably not quite weak enough to rule out a Fed hike." Today’s July ISM manufacturing release will serve as the week’s opening data signal.

Sterling’s decline was not driven by UK-specific fundamentals. There were no significant domestic policy or political catalysts on Monday, and the pound tracked dollar-side dynamics almost entirely.

ING’s DXY dollar index view, support near 99.35/40, a potential break back above 100 this week, would put further mild pressure on cable if realised, though the move is unlikely to be sharp absent a data surprise.

EUR/USD’s underperformance relative to what ING described as a favourable backdrop, solid eurozone hard data last week, lower oil, heavy dollar selling from Japan, may partly reflect U.S. Treasury activity in EUR/JPY.

Turner suggested Washington may have sold the cross "to avoid having to explain to the US public why it was selling the dollar," drawing on the roughly $13 billion in euro-denominated FX reserves held by the Exchange Stabilisation Fund, a sum he called "barely a drop in the ocean" relative to global flows.

ING’s strategic pivot point for EUR/USD sits at 1.1615/20 on the upside and 1.15 below; the Fed’s September decision will determine which level yields first.

ING’s base case: DXY recovers above 100 this week if NFP prints near consensus. A sub-50,000 payrolls reading would be the threshold needed to materially shift the dollar-bearish view.

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