Geopolitical risks resurface after Iran dismisses talks with the US, supporting the USD amid renewed Middle East tensions.
The US Dollar Index (DXY) hovers near the 100.00 level, failing to extend gains despite a modest uptick in Asian trading. The index remains nearly flat for the day, stalling a recovery from its lowest point since mid-June.
Optimism over a potential US-Iran deal faded after Tehran denied ongoing negotiations, contradicting earlier remarks from US President Donald Trump. Unconfirmed reports of drone strikes on US assets in Kuwait further heightened geopolitical risks, reinforcing demand for the safe-haven USD.
Iran’s warning to block shipping routes and target US vessels in the Persian Gulf has also lifted crude oil prices, stoking inflation concerns. This keeps expectations of a Federal Reserve rate hike alive, adding to the dollar’s underlying support.