Dollar pulls back as US-Iran attacks pause, oil drops

Oil prices sank in early Asian trade, with Brent crude LCOc1 tumbling 4.2% to $92.74 after the U.S. military temporarily halted its two-week long strikes. Iran will halt its own attacks as long as the U.S. does the same, a senior Iranian official told Reuters on Sunday, following a China-led push to resume stalled diplomatic efforts in Pakistan to end the war.

"Markets remain on the edge around the U.S.-Iran conflict and the path of oil prices," MUFG analysts wrote in a research report. "While it is difficult to know for sure how things will pan out, our base case remains for de-escalation over time for several reasons and as such for oil prices to decline."

In other major currencies, the New Zealand dollar NZD= was 0.1% higher at $0.5791, while its Australian counterpart AUD= was up by the same magnitude at $0.6996.

The U.S. dollar index =USD, which measures the greenback's strength against a basket of six currencies, was flat at 101.21 at the start of a week packed with central bank meetings, including that of the Federal Reserve.

Traders' bets that the Federal Reserve could raise interest rates at its upcoming policy meeting eased a little compared to last week.

Fed funds futures are pricing an implied 33.7% probability of a 25-basis-point hike at the next two-day meeting ending on Wednesday, down from 37.4% on Friday, according to the CME Group's FedWatch tool.

In cryptocurrencies, bitcoin BTC= was up 1% at $65,286.74, while ether ETH= climbed 1.7% to $1,945.22.

The dollar slumped against its major peers in Asian trading on Monday after the U.S. paused its bombing campaign in Iran during the weekend, prompting a drop in oil prices and boosting global investor confidence.