FUNDAMENTAL OVERVIEW USD: The US dollar has come under renewed pressure yesterday despite the lack of progress in the US-Iran negotiations and the Strait of Hormuz closure.
FUNDAMENTAL OVERVIEW USD: The US dollar has come under renewed pressure yesterday despite the lack of progress in the US-Iran negotiations and the Strait of Hormuz closure. What has been weighing on the greenback to start the week was the news saying that Iran proposed to reopen the Strait of Hormuz if the US blockade is lifted and then hold nuclear talks later.
This constant push for a diplomatic resolution instead of another full-fledged war has been supporting the risk sentiment on expectations that a deal would be reached eventually. Nonetheless, the stalemate is causing oil prices to rise, and we are now basically back around triple digit levels. Reports are also saying that Trump is unlikely to accept Iran’s proposal, which might keep the risk sentiment in check and support the US dollar in the short-term.
Overall, we are now in a consolidation phase until the next major catalyst. Tomorrow, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could give the US dollar a boost given the recent selloff.