Dollar Steadies as Traders Assess Middle East Developments

2026-07-13 13:19 By Joana Taborda 1 min. read

The dollar index was little changed at 100.9 on Monday, remaining near the level it has held throughout July as investors assessed developments in the Middle East while evaluating the outlook for US monetary policy.

Fresh military exchanges between the US and Iran, along with conflicting reports over whether the Strait of Hormuz remains open to shipping, pushed oil prices higher.

Markets are also awaiting this week's US CPI and PPI reports for further insight into inflation trends, as well as Fed Chair Warsh's testimony before Congress for additional clues on the central bank's policy path.

Traders are currently pricing in at least one Fed interest rate hike this year, with the probability of a September increase hovering around 71%.

The dollar weakened against the euro but strengthened against the yen, as the Japanese currency came under pressure following a Reuters report that Japan has no immediate plans to alter the asset allocation of its state pension funds.



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Dollar Steadies as Traders Assess Middle East Developments
The dollar index was little changed at 100.9 on Monday, remaining near the level it has held throughout July as investors assessed developments in the Middle East while evaluating the outlook for US monetary policy. Fresh military exchanges between the US and Iran, along with conflicting reports over whether the Strait of Hormuz remains open to shipping, pushed oil prices higher. Markets are also awaiting this week's US CPI and PPI reports for further insight into inflation trends, as well as Fed Chair Warsh's testimony before Congress for additional clues on the central bank's policy path. Traders are currently pricing in at least one Fed interest rate hike this year, with the probability of a September increase hovering around 71%. The dollar weakened against the euro but strengthened against the yen, as the Japanese currency came under pressure following a Reuters report that Japan has no immediate plans to alter the asset allocation of its state pension funds.
2026-07-13
Dollar Gains on Fresh US-Iran Strikes
The dollar index climbed above 101 on Monday, rising for the second straight session as escalating tensions in the Middle East fueled safe-haven demand for the currency. The US and Iran exchanged fresh missile strikes over the weekend amid ongoing disputes over shipping through the Strait of Hormuz, pushing oil prices higher and reinforcing expectations of interest-rate hikes to contain inflation. Investors are also awaiting key US inflation data this week for further clues on the Federal Reserve's policy outlook. Markets currently expect the Fed to deliver one rate increase before the end of the year. Minutes from the Fed’s June meeting, released last week, showed that a few policymakers saw a case for raising rates, though they ultimately supported keeping policy unchanged. Meanwhile, Fed Chair Kevin Warsh is scheduled to make his first appearance before the US Congress on Tuesday and Wednesday.
2026-07-13
Dollar Little Changed, Middle East Situation in Focus
The dollar index was little changed at around 100.9 on Friday and was also on track to end the week largely unchanged, as traders continued to assess the fragile and uncertain situation in the Middle East. Oil prices eased after surging earlier in the week, following reports that the US and Iran would continue peace negotiations. However, renewed exchanges of strikes between the two countries raised concerns that the conflict could escalate further, with the status of the previous truce remaining uncertain. The renewed hostilities also revived fears of another wave of inflationary pressure, reinforcing expectations that the Fed may need to tighten monetary policy. Markets currently assign a 62% probability of a Fed rate hike in September, up from 58% a week ago but down from around 70% earlier this week. Meanwhile, New York Fed President John Williams said that, among the factors driving inflation in the US, he is most concerned about demand fueled by AI.
2026-07-10