Investors flock to the greenback amid inflation concerns and stalled Middle East negotiations, lifting the dollar index near 99.50.
The U.S. dollar climbed on Tuesday as traders priced in a potential Federal Reserve policy shift to combat inflation, driven by rising energy costs. Geopolitical tensions, including stalled U.S.-Iran nuclear talks, added to safe-haven demand for the currency.
Oil prices fell 2% after President Donald Trump suggested progress in negotiations, though Iran’s latest proposal showed little change from prior terms. Analysts warned that without tangible progress, the dollar index could breach 99.50. Rising U.S. Treasury yields, fueled by inflation fears, reinforced expectations of higher Fed rates.
ING strategists noted that even a neutral Fed stance in June may not curb inflation expectations or long-term yields, keeping upward pressure on the dollar.