Fading semiconductor momentum and prolonged Middle East tensions may fuel further USD strength amid stalled US-Iran talks.
The dollar may extend its rally this week as key headwinds fade and geopolitical risks persist. Recent underperformance linked to semiconductor stocks has eased, removing a drag on the greenback despite strong US data and elevated oil prices.
Market conditions have shifted since last week, with risk sentiment weakening after US-Iran negotiations stalled and the Trump-Xi summit in Beijing yielded little progress. Oil prices remain pressured by high inventories but could rise if tensions in the Hormuz Strait escalate further.
Barclays highlights that Iran’s latest proposals fall short of US expectations, prolonging uncertainty. The firm expects these factors to support the dollar’s upward momentum in the near term.