Dollar edges higher as investors weigh Iran sanctions, Treasury buybacks

On Tuesday, the U.S. dollar showed signs of rebounding as investors weighed the impact of expanded sanctions against Iran and efforts to lower longer-dated Treasury yields. U.S. Treasury Secretary Scott Bessent unveiled additional sanctions against Iran, urging countries to sever financial ties with Tehran or face exclusion from the dollar-based financial system.

This development may have contributed to a slight reversal of the dollar's weakness observed at the end of last week, according to Ray Attrill, head of FX strategy at National Australia Bank. The euro weakened slightly to $1.1659, while the Swiss franc followed a similar trend, both on track for a second day of decline. Additionally, the trade dispute between the U.S. and Canada, along with the state of the U.S. Treasury market, continued to influence currency markets.

Bessent's announcement to double the size of quarterly repurchases of longer-dated bonds aimed to ease borrowing costs, adding to the stability in the Treasury market. Despite this, bond markets worldwide still faced supply challenges. The dollar also gained against the Japanese yen, and Bitcoin briefly surpassed $80,000 for the first time since mid-May, marking a nearly 30% gain for the month.