Dollar Steadies on US-Iran Uncertainty

2026-05-26 01:54 By Jam Kaimo Samonte 1 min. read

The dollar index steadied above 99 on Tuesday after facing pressure at the start of the week, as US military operations in southern Iran and ongoing peace negotiations kept investors cautious about inflation risks.

The US military reportedly targeted vessels suspected of attempting to deploy mines, along with missile launch sites in southern Iran, which allegedly posed a threat to American forces in the region.

At the same time, President Trump said talks with Tehran were progressing well, though he warned that further attacks could follow if negotiations collapsed, while a Pakistani mediator reportedly told China that an agreement was close.

Last week, the dollar climbed to its highest level in six weeks as investors increasingly bet that the Federal Reserve may need to tighten monetary policy to contain inflation, with markets fully pricing in a rate hike before year-end.

Attention is now turning to upcoming PCE inflation data for additional signals on the Fed’s policy path.



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Dollar Steadies on US-Iran Uncertainty
The dollar index steadied above 99 on Tuesday after facing pressure at the start of the week, as US military operations in southern Iran and ongoing peace negotiations kept investors cautious about inflation risks. The US military reportedly targeted vessels suspected of attempting to deploy mines, along with missile launch sites in southern Iran, which allegedly posed a threat to American forces in the region. At the same time, President Trump said talks with Tehran were progressing well, though he warned that further attacks could follow if negotiations collapsed, while a Pakistani mediator reportedly told China that an agreement was close. Last week, the dollar climbed to its highest level in six weeks as investors increasingly bet that the Federal Reserve may need to tighten monetary policy to contain inflation, with markets fully pricing in a rate hike before year-end. Attention is now turning to upcoming PCE inflation data for additional signals on the Fed’s policy path.
2026-05-26
Dollar Retreats on Iran Deal Optimism
The dollar index slipped to around 99 on Monday, pulling back from six-week highs as growing optimism over a potential US-Iran agreement that could reopen the Strait of Hormuz eased concerns about inflation and interest rate hikes. Still, President Donald Trump said Washington would keep its blockade of the strait in place until a formal agreement is reached, adding that he would not “rush” into a deal. The dollar had climbed to its highest level in six weeks last week as investors increasingly bet that the Federal Reserve may need to tighten monetary policy to contain inflation, with traders fully pricing in a rate hike by the end of the year. However, the prospect of a US-Iran deal and the potential reopening of Hormuz have led to lower oil prices, allaying inflation concerns. Investors are now focused on upcoming PCE inflation data for further clues on the Fed’s policy outlook. Trading activity is also expected to remain subdued with US markets closed for a public holiday.
2026-05-25
Dollar Little Changed on Friday
The dollar index traded little changed around 99.3 on Friday and was also on track to end the week broadly flat, as traders continued to monitor developments in the Middle East. Although the situation remains fragile and uncertain, a series of mixed signals from both sides has strengthened investor optimism that a diplomatic agreement could eventually be reached. Even so, oil prices remain roughly 50% above pre-conflict levels, continuing to fuel inflationary pressures and reinforcing a cautious stance among major central banks. Minutes from the latest Federal Open Market Committee meeting showed that most policymakers still see the possibility of additional rate hikes if inflation remains persistently above the Federal Reserve’s 2% target. Markets have also increasingly priced in the likelihood of a 25-basis-point rate hike by the end of the year.
2026-05-22