Geopolitical risks in the Strait of Hormuz support the US Dollar ahead of key UK inflation data and Federal Reserve meeting minutes.
The US Dollar Index (DXY) held near 99.60 on Tuesday, bolstered by safe-haven flows amid escalating tensions in the Strait of Hormuz. Iran reiterated its threat to keep the waterway closed until Washington meets conditions of an expired interim deal, while a vessel was reportedly struck by a projectile in the area earlier in the day.
Major currencies weakened against the USD, with EUR/USD trading lower. Gold and oil prices retreated despite the geopolitical premium. Markets now focus on Wednesday’s UK Consumer Price Index (CPI) data, Eurozone economic releases, and the Federal Open Market Committee (FOMC) minutes for further direction.
The USD showed strength against the New Zealand Dollar, reflecting broader risk aversion. Traders await the FOMC minutes for insights into the Fed’s policy outlook amid persistent inflation concerns.