Geopolitical risks in the Strait of Hormuz weigh on risk sentiment, pressuring the USD while boosting safe-haven assets ahead of key economic data.
The US Dollar Index (DXY) retreated toward 101.13 on Wednesday, extending losses as escalating tensions between the US and Iran fueled caution among investors. President Trump’s warning of potential strikes on Iranian infrastructure heightened concerns over disruptions to global oil supplies, supporting crude prices and gold while dampening risk appetite.
Markets await Thursday’s US Initial Jobless Claims, with forecasts expecting a rise to 212K from 208K. While the increase suggests limited layoffs, the data will offer fresh insight into labor market resilience. The ECB’s policy decision later in the day is also in focus, though no rate changes are anticipated.
EUR/USD climbed toward 1.1410 as the dollar weakened, while GBP/USD held near 1.3380 despite broader USD softness. Investors remain on edge ahead of ECB President Lagarde’s press conference, which may provide clues on future monetary policy adjustments.