Dollar Stabilizes After Yesterday's Sharp Drop, Here's Why!
The dollar index held around 99 on Tuesday (May 19), after weakening in the previous session. The stable movement occurred as the market reassessed the demand for safe-haven assets that had previously supported the dollar.
Sentiment improved amid renewed optimism over a potential US-Iran deal, which is seen as alleviating inflation concerns and reducing the need for hedging. US President Donald Trump said he was postponing attacks on Iran originally planned for Tuesday after Saudi Arabia, Qatar, and the United Arab Emirates requested a delay, believing that a deal acceptable to Washington could still be reached.
Before Monday's correction, the dollar had strengthened as a surge in oil prices related to the Middle East conflict and strengthening US inflation pressures pushed the market to dismiss the possibility of a Federal Reserve interest rate cut this year. At the same time, some market participants revived speculation that the Fed could still raise interest rates before the end of the year.
Market participants are now awaiting the FOMC meeting minutes and flash US PMI data for clarity on the outlook for monetary policy and the state of economic activity. Oil prices and developments in US-Iran negotiations will remain key variables, as they influence the path of inflation, interest rate expectations, and safe-haven demand for the dollar. (asd)
Source: Newsmaker.id
