United States Dollar Index remains below 99.00 as 10-year US yield steadies

The US Dollar Index (DXY) is currently trading below 99.00, with the Greenback experiencing losses following a minor gain the previous day. It is hovering around 98.80 during the early European hours on Friday, as markets respond to Washington's efforts to control rising yields through a long-end bond buyback program. This week, US Treasury yields have stabilized at 4.7%, despite Treasury Secretary Scott Bessent's comments suggesting accelerated debt buybacks could exceed the planned $4 billion per issue.

Bessent also mentioned that an upcoming fiscal plan, aimed at reducing the US budget deficit, is currently in development, with the deficit expected to have peaked under President Trump. Meanwhile, safe-haven demand for the US Dollar may increase due to oil price surges caused by diplomatic deadlocks in the Gulf, adding to ongoing inflation concerns and expectations of Federal Reserve rate hikes.

Tensions have escalated as Washington prepares an economic D-day initiative to impose severe restrictions on Iran's economy, targeting banks, shipping registries, cash transfers, and smuggling networks to isolate Tehran from global markets and force negotiations on nuclear and regional issues. Treasury Secretary Scott Bessent believes that the administration's economic pressure campaign will likely eliminate the need for significant military intervention, stating that maximum economic pressure makes large-scale kinetic escalation unlikely.

However, some analysts caution that recent gains in US rates appear fleeting, as bond yields have resumed their upward trend, reversing much of the initial reaction to the Treasury's surprise expansion of its long-end buyback program.