OIL prices fell below US$82 a barrel on Tuesday, extending a three-session losing streak after President Donald Trump said the United States was engaged in “good talks” with Iran aimed at ending the Middle East conflict, boosting expectations that regional oil supplies could return to normal.
Trump reportedly said he decided to suspend further strikes on Iran to provide negotiations with another opportunity to succeed. Washington quietly halted its military campaign against Tehran late Friday following nearly two weeks of fighting, while Iran also stopped retaliatory attacks on US bases in neighbouring countries.
Iranian and Omani negotiators also met over the weekend in an effort to reach an agreement that would restore shipping activity through the strategically important Strait of Hormuz, a major global energy transit route.
Oil market sentiment was further supported by improving supply conditions after crude exports resumed from the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, a key outlet for Kazakh oil that had recently been disrupted by Ukrainian drone attacks.
Meanwhile, the US dollar held near a one-month high on Tuesday as investors assessed the possibility of a Federal Reserve interest rate increase at its upcoming meeting, even as falling oil prices eased some inflation concerns.
The dollar index, which measures the greenback against a basket of major currencies including the euro and yen, edged up 0.03 per cent to 101.55.
The euro slipped 0.01 per cent to US$1.1366, while the dollar strengthened 0.05 per cent against the Japanese yen to 163.82. Sterling eased 0.02 per cent to US$1.3284.
Reuters reported that while the pause in US strikes on Iran pushed oil prices lower and reduced some inflation fears, US Treasury yields declined only modestly compared with movements in other markets overnight.
“The lack of meaningful buying at the front end of the Treasury curve has helped keep the U.S. dollar well supported,” said Chris Weston, head of research at Pepperstone.
The Federal Reserve is scheduled to conclude its two-day policy meeting on Wednesday. A growing number of major brokerages believe there is a possibility of a rate hike this week following a sharp rise in oil prices and escalating tensions in the Middle East.
According to CME FedWatch, markets are pricing in a 36.3 per cent probability of at least a 25-basis-point rate increase at the Fed’s policy announcement, up from 16 per cent a week earlier. Expectations for a rate increase at the central bank’s September meeting stand at 81 per cent.
“If we do get a surprise hike, surely that's going to lend support to the dollar, probably going to see new highs and probably sustain the level of strength on the dollar especially against the lower yielders, which are Japanese yen and Swiss franc,” said Mahjabeen Zaman, head of foreign exchange research at ANZ Bank, in a podcast.
Investors are also awaiting US second-quarter gross domestic product data and the Federal Reserve’s preferred inflation measure, core personal consumption expenditures (PCE), for further signals on the strength of the world’s largest economy.
The Bank of England and Bank of Japan are widely expected to leave interest rates unchanged at their respective meetings on Thursday and Friday, while maintaining a cautious approach towards inflation risks.
On Wall Street, markets ended mixed on Monday, with the Dow Jones Industrial Average gaining 0.5 per cent, the S&P 500 largely unchanged and the Nasdaq edging lower.
The yen remained close to last week’s four-decade lows against the dollar, with the Bank of Japan expected to keep the possibility of further rate increases open to support the currency, although policymakers are likely to remain cautious over the pace and timing of any moves.
“With no change in rates expected, we think that the BOJ will need to strike a fairly hawkish note in order to make clear to markets that it is credible in its attempts to both achieve its inflation mandate and support the yen,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.
Among other major currencies, the Australian dollar weakened 0.11 per cent against the greenback to US$0.6981, while the New Zealand dollar declined 0.12 per cent to US$0.5766.
In cryptocurrency markets, Bitcoin fell 1.88 per cent to US$63,694.59, while Ether dropped 2.83 per cent to US$1,890.30. - July 28, 2026
