Dollar holds near 100.77 as Iran strikes, ECB and Fed meetings loom

The US dollar traded in a narrow range near 100.76 on Monday as currency markets weighed an intensifying US-Iran military confrontation against a week packed with central bank decisions, including meetings from the Federal Reserve and the European Central Bank.

Geopolitical Risk Supports the Greenback

The dollar index edged up marginally from Friday's close of 100.77, according to Trading Economics, as safe-haven demand linked to Middle East hostilities offset broader bearish pressure on the currency. The U.S. military carried out a fresh wave of airstrikes on Iran early Monday, striking targets around the northwestern city of Tabriz after the death of a third American service member since Friday, according to the Associated Press. U.S. Central Command said it had now conducted nine consecutive nights of strikes targeting Iranian military infrastructure.tradingeconomics+2

President Donald Trump said over the weekend that Iran had been hit "very hard," according to CNN, while NPR reported that 17 U.S. service members have now been killed since the conflict began in February. Despite the military escalation, diplomatic channels remain open; Trump declared on July 10 that the earlier ceasefire was "OVER" but that the U.S. had agreed to continue talks at Iran's request.reuters+2

Central Banks in Focus

Investors adopted a wait-and-see posture ahead of multiple policy decisions this week. The ECB's Governing Council meets July 22–23, with policymakers widely expected to hold rates steady after hiking earlier this year. The Federal Reserve's two-day meeting follows on July 28–29, where markets see roughly a 70% probability of unchanged rates at 3.50%–3.75%, according to Reuters.reuters+3

In Asia, the People's Bank of China kept its one-year loan prime rate at 3.0% and the five-year rate at 3.5% on Monday for a fourteenth straight month, as all 23 respondents in a Reuters poll had predicted. The yuan firmed modestly against the dollar following the decision.english.news+1

Currencies in Holding Pattern

The euro held near $1.144 while sterling traded around $1.33, both confined to tight weekly ranges. Analysts noted that the combination of geopolitical uncertainty and looming rate decisions had pushed implied volatility lower across major pairs, with traders unwilling to take directional bets ahead of Thursday's ECB outcome and the following week's Fed verdict.litefinance+3