DXY Falls to 10-Week Low

The dollar index fell below 98 on Friday, reaching its lowest level in ten weeks, despite stronger-than-expected US labor data that reinforced views the economy remains resilient amid the energy shock caused by the Iran conflict. US nonfarm payrolls increased by 115,000 in April, well above expectations for a 62,000 rise, marking a second consecutive monthly gain for the first time in nearly a year. The unemployment rate held steady at 4.3%. Markets are now weighing solid economic data against expectations that the Federal Reserve will remain cautious as higher energy prices continue to fuel inflation risks. President Donald Trump said the month-long ceasefire with Iran was still holding despite renewed clashes involving US and Iranian forces. Investors remain focused on the Strait of Hormuz, which has been largely closed since the war began, while Tehran has yet to respond to Washington’s proposal to reopen the key trade route.

The dollar index edged slightly lower to below 98 on Friday, hovering around pre-war levels, as traders continued to assess developments in the Middle East. Uncertainty persists over how quickly the US and Iran can reach an agreement to end the conflict, after US forces struck missile and drone launch sites and other military assets in Iran that Washington said were linked to attacks on three US warships transiting the Strait of Hormuz. Still, President Trump said the ceasefire remains in effect. Meanwhile, investors are also awaiting today’s jobs report for fresh signals on the health of the labor market. The Federal Reserve is widely expected to keep interest rates unchanged through the remainder of the year. The greenback was mostly stronger against the pound after local election results reinforced expectations of significant losses for the Labour Party. On the week, the dollar index was little changed.

The US dollar index climbed above 98 on Friday, maintaining gains from the previous session as renewed clashes between the US and Iran in the Strait of Hormuz kept geopolitical risk elevated. Three US Navy destroyers transiting the strategic waterway reportedly intercepted Iranian attacks and carried out retaliatory strikes, although President Donald Trump said the ceasefire remains in effect. The Trump administration is still awaiting Iran’s response to a proposal aimed at reopening Hormuz and bringing an end to the nearly 10-week conflict, with reports suggesting Tehran is expected to reply via Pakistan within the next two days. Investors are also focused on the upcoming April jobs report, which is expected to show the US economy added 62K jobs last month, down from 178K in March, while the unemployment rate is projected to remain steady at 4.3%. Despite Friday’s strength, the dollar is on track to end the week broadly unchanged against most major currencies.