Dollar Strengthens, Global Tensions Grow
The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, extended its gains for the third straight session and traded higher around 99.10 during Asian hours on Thursday. The greenback continued to strengthen following the US Federal Reserve’s (Fed) decision to keep its policy interest rate unchanged at 4.25%–4.50% at its June meeting on Wednesday, as widely expected. The Federal Open Market Committee (FOMC) still sees about 50 basis points of interest rate cuts by the end of 2025.
Fed Chair Jerome Powell hinted, in his post-meeting press conference, that inflation is still slightly above target and could rise in the future, citing the impact of US President Donald Trump’s tariffs. Powell supported the current policy stance that keeps the central bank well-positioned. He cautioned that ongoing policy uncertainty would keep the Fed on hold, and any rate cuts would depend on further improvement in employment and inflation data.
The US dollar also found support from rising demand for safe-haven assets amid ongoing Middle East tensions. Bloomberg, citing unnamed sources, reported that “US officials are bracing for a possible Iranian attack in the coming days.” “US plans for any Iranian attack continue to evolve.” Additionally, the Wall Street Journal, citing individuals familiar with the discussions, said that US President Trump said late Tuesday that he approved a plan to attack Iran, but was holding back on whether Tehran would halt its nuclear program.
Source: FXStreet
