Dollar weakens as US stock futures gain on improved risk sentiment

Financial markets turned risk-positive at the beginning of the new week as investors reacted positively to news that the United States and Iran had halted strikes.

The development improved market sentiment and prompted a broad move toward riskier assets.

Investors also turned their attention to a busy economic and central bank calendar, with several key events scheduled throughout the week.

The Federal Reserve Bank of Dallas is also scheduled to release its Manufacturing Business Index.

The data will come as investors assess the broader economic outlook ahead of the Federal Reserve's upcoming policy meeting.

US stock futures move higher

US stock index futures also reflected the improvement in investor sentiment.

The major US stock index futures were up between 0.8% and 1.4% on the day.

At the same time, the US Dollar (USD) Index declined by more than 0.2%.

The index was trading near 101.20 at the time of writing.

The moves in stock futures and the dollar came as investors prepared for a week filled with important economic and monetary policy developments.

Federal Reserve rate decision ahead

The Federal Reserve is scheduled to hold its two-day policy meeting this week.

The US central bank is expected to announce its interest rate decision on Wednesday.

The upcoming decision will be closely watched by investors as markets assess the direction of US monetary policy.

The policy meeting is one of the key events on the economic calendar this week and comes alongside the release of economic data later on Monday.

Euro gains against the dollar

The EUR/USD currency pair also benefited from the improved market sentiment at the beginning of the new week.

After losing about 0.6% in the previous week, EUR/USD opened with a bullish gap.

The pair was last seen trading around 1.1400.

The move marked a stronger start to the week for the euro against the US dollar after the pair ended the previous week lower.

The decline in the US Dollar Index also provided a backdrop for the currency pair's move higher during the session.

Sterling holds ground ahead of BoE decision

GBP/USD held its ground at the beginning of the new week and was trading slightly below 1.3350.

The pair entered the new week after losing nearly 1% during the previous week.

The British pound's performance will remain in focus as investors prepare for the Bank of England's upcoming monetary policy announcement.

The Bank of England is scheduled to announce its monetary policy decisions on Thursday.

With both the Federal Reserve and the Bank of England set to announce policy decisions this week, investors will be watching developments in the US dollar and British pound closely.