Dollar Rises as Fed Rate Hike Bets Firm, Pressuring Oil

The dollar rallied on Monday as traders priced in a growing likelihood that the Federal Reserve will raise interest rates as soon as September, a shift that weighed on oil prices and other dollar-denominated commodities.

The greenback gained after the Fed's June meeting signaled a potential rate increase by year-end, prompting markets to bring forward tightening expectations. The dollar index climbed as traders adjusted their positions, with the currency strengthening against major peers. Meanwhile, oil prices fell as a stronger dollar makes crude more expensive for holders of other currencies, dampening demand. The pressure on oil persisted even as mediators reported progress in US-Iran nuclear talks, which could eventually lead to increased Iranian oil exports. On NowPrice, live fuel prices and charts show the market reacting to the dual headwinds of a firmer dollar and potential supply additions.

Traders will now focus on upcoming US economic data, including jobs and inflation reports, for further clues on the Fed's timing. Any signs of sustained economic strength could solidify September rate hike bets, keeping the dollar bid and adding to headwinds for oil. Conversely, a dovish surprise or a breakdown in Iran talks could reverse some of the recent pressure on crude prices.