Dollar Index Climbs as US-Iran Attacks Dash Expectations
The dollar index (DXY) hovered near 99.2 as investors assessed the latest developments in the Middle East and mixed signals over a possible US-Iran agreement that could end the war and reopen the Strait of Hormuz.
Iran’s Revolutionary Guards hit a U.S. airbase after U.S. President Donald Trump rejected a report that Washington was close to a deal with Tehran.
The DXY dollar index rises 0.1% to 99.296 after hitting a seven-week high of 99.544 overnight. Traders reported that U.S. Treasury yields and the DXY dollar index rise as renewed escalation in the Middle East weakened hopes for a near-term peace agreement.
Oil prices rebounded as expectations for a swift diplomatic resolution receded, reinforcing inflation concerns that have increasingly influenced markets in recent weeks.
Inflation data added to the uncertainty, with headline and core PCE readings rising 0.4% and 0.2% month over month, both below expectations, although annual rates remained elevated at 3.8% and 3.3%, still well above the Federal Reserve’s target.
Investors are also assessing the Federal Reserve’s interest rate outlook ahead of economic data later in the session. U.S. data will remain key, as a more hawkish Fed could limit any pullback in the dollar. Personal spending increased in line with forecasts, while first quarter GDP growth was revised lower.
Federal Reserve officials continued to strike a cautious tone, with Vice Chair Jefferson warning that inflation risks remain skewed to the upside and Minneapolis Fed President Kashkari saying price pressures are still too high. Rand Climbs as SARB Hikes Rates to Counter Inflation Risk
