The dollar index rebounded from a six-week low on Monday as Treasury yields pared losses after ISM data showed U.S. manufacturing activity expanded at its fastest pace in more than four years, while oil prices stabilized at lower levels after Iran said no talks with the U.S. were under way, contradicting claims by President Donald Trump once attacks were called off. Trump criticized Iran for seeking talks while publicly denying them and renewed pressure on oil companies to lower U.S. gasoline prices. Iran said earlier it has been discussing with Oman creating a new route through the Strait of Hormuz. New York Fed President John Williams said inflation is still expected to ease gradually, but the Fed is prepared to raise rates if price pressures fail to moderate. Tech shares rose after the Trump administration invited AI firms to review a finalized oversight framework.

Yen stability after last week's coordinated intervention and broad dollar gains helped DXY move back above its 100-day moving average (DMA) at 99.73 and lower Bollinger Band. EUR/USD looks set to consolidate below 100-DMA cluster 1.1540-68 into Friday's payrolls report, with risks skewed lower unless U.S. jobs data disappoints. EUR/CHF remained constructive, aided by Swiss CPI matching expectations, broader risk appetite and euro zone factory output growing at its fastest pace in 4-1/2 years in July. GBP/USD stayed under pressure beneath 1.35 as falling oil and gilt yields offset support from narrowing Fed-BoE policy expectations and short-covering flows. USD/JPY rebounded toward 157 on stronger U.S. data and risk appetite, but intervention concerns and improved yen sentiment may cap near 158, leaving the pair broadly range-bound between 155 and 158 ahead of Friday's U.S. jobs report. AUD/USD was vulnerable to a deeper pullback toward 0.6950 and possibly the 200-DMA area near 0.6920 as CNH eased unless Friday's payrolls report revives upside momentum. CNH edged down for a second day after data showed China's manufacturing sector expanded at its slowest pace in four months and despite last week's Politburo pledge of stronger policy support.

Treasury yields dropped about 4 to 6 basis points (bps). The 2s-10s curve fell about 3 bps to +42.3 bps.

The S&P 500 gained 1.56%.

WTI oil dropped nearly 6%.

Gold was nearly flat while copper rose about 0.8%.

Heading toward the close: EUR/USD -0.16%, USD/JPY -0.31%, GBP/USD -0.41%, AUD/USD -0.34%, DXY +0.09%, EUR/JPY -0.60%, GBP/JPY -0.87%, AUD/JPY -0.81%.(Editing by Terence Gabriel Robert Fullem is a Reuters market analyst. The views expressed are his own)