Recent repricing of Federal Reserve rate expectations supports the USD, offsetting declines from eased Middle East tensions and lower oil prices.
The US Dollar Index stalled near 100.00 as geopolitical risks in the Middle East eased and oil prices retreated toward USD90. However, the greenback remains supported by a hawkish shift in Fed rate expectations ahead of key US inflation data and the June FOMC meeting.
Last week’s stronger-than-expected nonfarm payrolls report increased the likelihood of the Fed dropping its easing bias at the upcoming June meeting. The May CPI report, due tomorrow, will be a critical test for further rate repricing. The June 17 FOMC meeting, the first under new Fed Chair Kevin Warsh, may serve as a pivotal moment for policy expectations and the dollar’s trajectory.
Market focus remains on Fed policy signals, with geopolitical developments providing only temporary relief to the USD’s upward momentum.