Uncertain US-Iran negotiations and hawkish Fed remarks drive safe-haven demand, supporting the Dollar Index above 99.50.
The US Dollar Index (DXY) trades at 99.75 in early European trading, bolstered by geopolitical tensions and Federal Reserve signals. Uncertainty over US-Iran negotiations, including conflicting statements on a potential shipping deal, has fueled safe-haven flows into the USD.
Markets are also reacting to hawkish comments from Fed officials. Kansas City Fed President Jeff Schmid suggested tighter monetary policy may be needed to curb inflation, aligning with a 54.7% probability of a September rate hike, per CME FedWatch.
Weaker-than-expected US ADP employment data, showing a 44k gain versus the 70k consensus, added mixed signals but firmer wage dynamics kept pressure on the Fed to maintain a restrictive stance.