United States Dollar Index slumps to near 99.75 due to Iran deal hopes
The US Dollar (USD) underperforms its major currency peers during the European trading session on Tuesday, as renewed hopes of a permanent peace deal between the United States (US) and Iran have diminished its safe-haven demand.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.27% lower to near 99.73.
The Iran deal hopes have intensified, following remarks from US President Donald Trump that negotiations with Tehran are in “final throes” and the Strait of Hormuz could open up in “two or three days” if an agreement with Tehran is secured.
The US Dollar had outperformed in the last few months as elevated oil prices due to Hormuz closure boosted inflationary pressures globally and prompted hawkish Federal Reserve (Fed) bets.
According to the CME FedWatch tool, there is an almost 69% chance that the Fed will deliver at least one interest rate hike this year. This is a sharp turnaround from two interest rate cuts anticipated before the onset of the Middle East war.
Meanwhile, investors await the US Consumer Price Index (CPI) data for May, which will be released on Wednesday. Investors will pay close attention to the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
The US headline CPI is expected to arrive higher at 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – grew at a faster pace of 2.9% against the previous reading of 2.8%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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