Brent crude approaches critical 93.22 support amid easing Iran tensions, while the Dollar Index slips to 101.881 as markets await Tuesday's US CPI data.
Brent fell nearly 3% to around 95 after Trump called further US strikes on Iran highly unlikely if talks progress, deflating the geopolitical risk premium. Fundamentals add pressure: JPMorgan figures show supply exceeding demand by 1.4 million barrels per day in October. A break below 93.22-93.80 targets 88.21, though renewed Strait of Hormuz incidents or failed diplomacy could reverse the move.
The Dollar Index fell 0.39% to 101.881, reversing about 56% of Friday's 0.70% advance, as improved risk appetite reduced defensive dollar demand. This was not driven by rates: December Fed hike odds held around 81% and yields were roughly unchanged, so the retreat could reverse quickly if risk aversion returns or Tuesday's US CPI reinforces tightening expectations.
Brent crude fell nearly 3% to 95 as President Trump downplayed the likelihood of further US strikes on Iran, signaling a potential unwinding of the geopolitical risk premium. Meanwhile, the Dollar Index retreated 0.39% to 101.881 as risk appetite improved, though Fed rate hike expectations for December remain steady at 81%.
Trump downplayed the chance of renewed US military strikes against Iran while negotiations continue, unwinding the geopolitical risk premium, and the market also faces a supply surplus of 1.4 million barrels per day per JPMorgan estimates.
The 93.22-93.80 support area from last week's low and the 50% retracement; a sustained break opens the way to 88.21, while a successful defense could preserve the consolidation.
Easing risk aversion reduced the defensive demand that had supported it last week, not any change in Fed expectations - the December hike probability stayed around 81%.
Possibly - the article notes the decline is vulnerable if risk aversion returns or if Tuesday's US CPI report strengthens expectations for further rate increases.