United States Dollar Index holds ground on safe-haven demand
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is inching higher after three days of losses and trading around 99.60 during the Asian hours on Tuesday.
The US Dollar Index (DXY) is holding steady amid safe-haven demand, as geopolitical tensions between the United States and Iran continue to cause uncertainty. The index currently trades near 99.60, following a three-day decline and trading around the 99.60 level during Asian trading hours. Safe-haven demand for the US Dollar has been driven by the US President Donald Trump's announcement that he has no interest in renewing the expiring nuclear agreement with Iran, citing the ongoing naval blockade of Iranian ports.
Additionally, Iranian Foreign Ministry spokesman Esmail Baghaei stated that an agreement remains elusive due to security complexities and obstructive behavior from destructive elements, with the US first needing to lift its blockade. The Greenback may face challenges as hawkish sentiment surrounding the Federal Reserve's policy outlook wanes, as market anticipation of a rate increase next month has dropped to 35%, down from 47% a month earlier.
Meanwhile, US data has softened, dampening expectations of Fed tightening, with the 25 basis points of tightening still priced in by the end of the year considered too much by analysts. Despite this, the US Dollar remains the world's most heavily traded currency, accounting for over 88% of all global foreign exchange turnover.
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