The dollar index slipped to around 107.2 on Monday, ending a three-day winning streak, as the euro strengthened following renewed optimism about a potential resolution to the Ukraine conflict.

Ukrainian President Volodymyr Zelenskyy announced on Sunday that European leaders had agreed to draft a peace plan to present to Washington, just days after he was unable to reach a deal with US President Donald Trump in the Oval Office.

The dollar also lost some ground after US Commerce Secretary Howard Lutnick stated on Sunday that tariffs against Mexico and Canada remain "fluid," suggesting they could be lower than the proposed 25%.

However, Lutnick emphasized that the additional 10% tariff on China is confirmed and "set." Despite these developments, traders continue to expect the dollar to maintain upward momentum as the trade war intensifies. This, in turn, could drive inflation and discourage the Federal Reserve from further cutting interest rates.

Source: Trading Economics