The U.S. dollar inched higher Monday as markets turned their focus to diplomatic efforts aimed at ending the war in Ukraine and the closely followed Federal Reserve’s Jackson Hole symposium.

At 03:00 ET (08:00 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, was up 0.2% at 97.890, recovering after last week’s 0.4% decline.

Zelensky Heads to Washington

Talks between U.S. President Donald Trump and Russian President Vladimir Putin late last week failed to secure a ceasefire in Ukraine. Attention now shifts to a meeting in Washington between Trump and Ukrainian President Volodymyr Zelensky later in the day.

Zelensky will be joined by several European leaders and is expected to face pressure to consider a settlement viewed as favorable to Moscow, potentially involving the loss of part of the eastern Donetsk region.

Ukraine has repeatedly rejected the idea of ceding territory to Russia. On Sunday, Trump suggested Zelensky could bring the conflict to an “almost immediate” end if he accepted Moscow’s conditions.

“Ukraine and Europe have placed security guarantees, including U.S. commitments, at the heart of any peace process. Any progress here would be welcomed by markets, though the territorial issue remains highly contentious,” analysts at ING noted.

Powell’s Jackson Hole Speech in Focus

Markets are also preparing for the Federal Reserve’s annual Jackson Hole Symposium later this week. Fed Chair Jerome Powell is scheduled to speak Friday on the economic outlook and the central bank’s policy approach.

“It may be premature for Powell to all but confirm a September rate cut,” ING said. “But as labor market conditions evolve, Powell will eventually have to acknowledge the shift.”

Futures now indicate roughly an 85% probability of a quarter-point rate reduction next month. Analysts noted that Powell would need to deliver a strongly hawkish message to significantly alter those expectations.

“With risk appetite holding firm and energy prices soft, we anticipate the dollar will remain under some pressure as dollar-based investors continue deploying capital,” ING added.

Euro Trades in Tight Range

In Europe, EUR/USD slipped 0.2% to 1.1671, consolidating within a narrow range ahead of the Washington discussions on Ukraine. Monday’s eurozone data was limited to June trade figures, while the main focus this week will be Thursday’s flash August PMIs.

“EUR/USD should remain supported in the 1.1650–1.1750 range early in the week, but could attempt a move toward 1.1830 if Powell adopts a dovish tone on Friday,” ING noted.

GBP/USD dipped 0.1% to 1.3540 after gaining nearly 0.8% last week.

“The driver here is the Bank of England’s more credible hawkish stance, with markets now pricing in just 50 basis points of further easing compared to around 125 basis points of cuts expected from the Fed through 2026,” ING explained. “This should underpin GBP/USD this week, where a break above 1.3585/1.3600 could pave the way for 1.3680/1.3700.”

Quiet Trading in Asia

In Asia, USD/JPY edged up to 147.22 after data on Friday showed stronger-than-expected second-quarter growth in Japan’s economy.

USD/CNY slipped slightly to 7.1803, with the yuan steady after last week’s weaker-than-expected Chinese industrial output and retail sales figures fueled calls for additional policy support.

AUD/USD added 0.1% to 0.6516, reflecting modest strength in the Australian dollar.