After market sentiment was dampened by developments over the weekend, the US dollar started the week on a gloomy note.
The moderate depreciation was influenced by risk-off sentiment as the trade war tensions between the United States (US) and China began to subside.
The talks between the two countries at the ASEAN Summit in Kuala Lumpur are expected to be concluded by the two leaders later this week in South Korea.
The appeal of the safe-haven currency US dollar began to fade as market sentiment recovered, which boosted investor confidence.
In addition, US inflation indicators in data released last week supported expectations for the central bank to continue easing monetary policy at the latest FOMC meeting.
The Federal Reserve (Fed), which initiated its first interest rate cut of the year at its September meeting, is expected to continue the same action at the remaining two meetings at the end of 2025.
Besides the Fed, several other central banks including the Bank of Canada (BOC), Bank of Japan (BOJ) and European Central Bank (ECB) will also announce their interest rates at their meetings this week.
Investors should be prepared to expect volatile market risks for the last week of trading in October.
