The US Dollar Index (DXY), which tracks the performance of the Greenback against a basket of six major currencies, is diving sharply on Monday as optimism surrounding a potential Ukraine peace deal weighs on safe-haven demand. European leaders have signaled their willingness to back security guarantees for Ukraine, boosting risk sentiment across global markets.

Meanwhile, United States (US) economic data provided mixed signals. The ISM Manufacturing PMI missed forecasts, while the S&P Global Manufacturing PMI came in stronger than expected. As a result, DXY slides back from last week's highs, undoing Friday's advance. Regarding tariffs, Trump was on the wires on Monday during the American session and reiterated its plan to double Chinese tariffs from 10% to 20%, but had little impact on the USD.
US Dollar plunges as geopolitical optimism lifts sentiment, US data comes mixed
DXY tumbles as investors reduce safe-haven exposure amid Ukraine peace deal optimism. This came after several European leaders cooled down the jitters after Friday's heated conversations between the American and Ukrainian presidents.
On the data front, S&P Global's final Manufacturing PMI for February exceeded estimates at 52.7, strengthening from the preliminary reading.
ISM Manufacturing PMI came in at 50.3, slightly below the 50.5 forecast and down from January's 50.9.
The ISM Prices Paid subindex spiked to 62.4, surpassing estimates and accelerating from January's 54.9.
New Orders component dropped to 48.6, reflecting a significant decline from 55.1 in January.
As a reaction, Wall Street trades mixed, with major US indices posting marginal gains and losses. US Treasury yields drift lower, extending the downtrend from last week's highs.
The CME FedWatch Tool indicates an increasing probability of a Fed rate cut in June, though some odds still favor steady rates.

Source: Fxstreet