Dollar Eases on Iran Deal Optimism

2026-05-21 01:49 By Jam Kaimo Samonte 1 min. read

The dollar index slipped to around 99 on Thursday, pulling back from a six-week high as growing optimism over a potential peace agreement between the US and Iran eased inflation and irate hike concerns while dampening safe-haven demand for the greenback.

President Trump said the US was in the final stages of negotiations with Iran, raising expectations that the strategically important Strait of Hormuz could soon reopen.

The prospect of renewed shipping flows triggered a sharp decline in oil prices, helping to moderate inflationary pressures and reducing expectations that central banks will need to tighten policy.

Still, minutes from the Federal Reserve’s latest meeting indicated that most policymakers believe another rate hike this year could remain appropriate if inflation stays above the Fed’s 2% target.

Markets still broadly expect the Fed to leave rates unchanged for the rest of the year, though traders currently assign roughly a 50% probability to a rate increase in December.



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Dollar Eases on Iran Deal Optimism
The dollar index slipped to around 99 on Thursday, pulling back from a six-week high as growing optimism over a potential peace agreement between the US and Iran eased inflation and irate hike concerns while dampening safe-haven demand for the greenback. President Trump said the US was in the final stages of negotiations with Iran, raising expectations that the strategically important Strait of Hormuz could soon reopen. The prospect of renewed shipping flows triggered a sharp decline in oil prices, helping to moderate inflationary pressures and reducing expectations that central banks will need to tighten policy. Still, minutes from the Federal Reserve’s latest meeting indicated that most policymakers believe another rate hike this year could remain appropriate if inflation stays above the Fed’s 2% target. Markets still broadly expect the Fed to leave rates unchanged for the rest of the year, though traders currently assign roughly a 50% probability to a rate increase in December.
2026-05-21
Dollar Lower on US-Iran Deal Hopes
The dollar index held lower around 99.1 on Wednesday, pulling back from the early-April highs reached in the previous session, as optimism grew that the US and Iran could soon reach a deal. According to a White House pool report, President Trump said negotiations with Iran are in their final stages, helping drive oil prices lower for a 2nd straight session. Even so, crude prices remain nearly 50% above pre-war levels. Investors remain concerned that elevated energy costs could fuel inflationary pressures and potentially force central banks to tighten monetary policy further. Minutes from the FOMC’s April meeting showed that a majority of policymakers believe additional rate hikes may be warranted if inflation stays persistently above the Fed’s 2% target. Markets still broadly expect the Federal Reserve to leave interest rates unchanged for the rest of the year, though traders currently assign roughly a 50% probability to a rate increase in December.
2026-05-20
Dollar Near 6-Week Highs
The dollar index was little changed at 99.4 on Wednesday, hovering close to high levels not seen since early April, supported by concerns about rising inflation and high interest rates. The Strait of Hormuz remains largely closed, keeping oil prices roughly 50% above pre-war levels and fueling concerns over sustained inflationary pressures. Higher energy costs are expected to continue to add upward pressure to consumer prices, likely forcing central banks to maintain tighter monetary policy or even resume interest rate hikes, while also complicating fiscal conditions. The Fed is still expected to keep the federal funds rate unchanged for the remainder of the year, although market-implied odds of a rate hike in December currently stand at around 50%. Investors are now awaiting the release of the latest FOMC minutes later in the day for further insight into policymakers’ outlook on inflation and interest rates. The greenback was little changed against major currencies
2026-05-20