The US Dollar Index cannot rally with Washington on the offer
The Dollar Index trades near 99.50, roughly a tenth of a percent lower, having opened directly on its 200-day Exponential Moving Average (EMA) and failed there inside the first minutes, with a session low just above 99.25 taking out the August range.
The US Dollar Index is struggling to rally as the deadline approaches for ending the conflict over the Strait of Hormuz, with no agreement in place to replace a 60-day framework. An Iranian official suggested the country might shift from a defensive stance to an offensive one if diplomacy fails, which could aggravate tensions in the region.
Crude Oil prices rose alongside the Index, with WTI near $83.00 and Brent above $88.00. Despite the Dollar's exposure to energy exports, the Euro and Pound have both hit two-month and three-month highs, respectively, while Gold gained support. However, the Dollar's hike premium has weakened due to disappointing economic data, including a lower Consumer Price Index (CPI), Producer Price Index (PPI), and retail sales.
The Empire State manufacturing survey showed a stronger-than-expected reading, but its significance is debated. A coordinated Yen-buying operation between Tokyo and the US Treasury, the first joint action since 1998, prompted the Dollar to fall from above 101.50 to below 100.00. The Federal Open Market Committee (FOMC) will release minutes from the July 29 meeting, which may provide further clues about the Dollar's future.
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