US-Iran Tensions Lift Dollar and Shape Markets

U.S. strikes on an Iranian site and Iranian retaliation near Bandar Abbas pushed the dollar index above 99.3, peaking near 99.53. The Islamic Revolutionary Guard Corps warned any further U.S. attacks would meet “a more decisive” response. Safe-haven demand lifted GBPUSD toward 1.3400, EURUSD near 1.162, yen to 159.6, and rupee to 95.68.

Dollar index climbs as US-Iran tensions escalate

Talks to end hostilities and reopen the Strait of Hormuz remain deadlocked. President Donald Trump said he was “not satisfied” with progress and rejected reports of an Iran-Oman joint shipping oversight. Iranian state television aired a draft U.S.–Iran memorandum that U.S. officials called a “complete fabrication.” The waterway and Iran’s nuclear program remain central to the impasse.

Dollar Edges Higher on US-Iran Tensions

The dollar index (DXY) traded 99.3-99.53. Spot gold fell from $4,559 to $4,406 per ounce. Oil prices swung, up about 2 % after the strikes but down over 5 % in other sessions. Analysts expect the April PCE to rise 3 % year-over-year, though another source projects an 8 % jump versus a 3.5 % prior reading. FedWatch shows a 43 % chance of unchanged rates, with most expecting at least one hike this year. The euro is $1.162, the pound $1.342, the yen 159.6, and the rupee 95.68.

Dollar Weakens on US-Iran Peace Hopes

Higher oil prices raise inflation concerns, prompting markets to price a more hawkish Fed stance. The European Central Bank is expected to raise rates in June, and the Bank of Japan is likely to hike at its June meeting, with odds above 70 %. Energy-price shocks could keep the dollar attractive as a safe-haven asset.

Reuters

President Trump emphasized dissatisfaction with negotiations; Secretary of State Marco Rubio said a deal could take “a few days.” The IRGC warned of a “more decisive” response to further U.S. attacks, while U.S. officials called the draft memorandum a fabrication. Analyst Tim Waterer cautioned that U.S. optimism may be premature, and Iranian officials accuse Washington of violating a ceasefire. Sources differ on oil’s direction (up 2 % vs down >5 %) and on the PCE forecast (3 % vs 8 %).

CNBC

• “Cook said she is prepared to support rate hikes if inflationary pressures intensify.” — Lisa Cook, Federal Reserve Governor

Gold hits 2-month low as US-Iran tensions boost inflation fears

Investors await the April PCE price index later today for clues on Fed policy. The June 16-17 Federal Reserve meeting and any diplomatic breakthrough will determine whether the dollar’s rally endures or yields to a de-escalation of the U.S.–Iran conflict.

Dollar index climbs as US-Iran tensions escalate