The dollar fell as the euro strengthened amid optimism of a solution to the Ukrainian crisis

The dollar index is trading near the levels of 107.30 on Monday, where the dollar fell today after a three-day series of gains, as the euro strengthened its strength after renewed optimism that a solution to the conflict in Ukraine can be found.

Ukrainian President Volodymyr Zelensky announced on Sunday that European leaders had agreed to draft a peace plan to be presented to Washington, just days after he failed to reach an agreement with US President Donald Trump during their meeting in the Oval Office.

The dollar also lost some of its strength after US commerce secretary Howard Lutnick's remarks on Sunday, in which he indicated that the tariffs imposed on Mexico and Canada are still subject to change, which opens the door to the possibility that they will be lower than the 25% initially proposed.

Lutnick also confirmed that the additional 10% tariff on China will remain in effect as it is.

Despite these developments, traders expect the dollar to maintain its upward momentum as the trade war between the United States and China continues to escalate.

This situation may lead to higher inflation, which may limit the Fed's ability to cut rates.