FX.co ★ Dollar Finds Support on Mideast Jitters

The US dollar index climbed back above 100 on Tuesday, erasing the previous session’s losses as a key deadline set by President Donald Trump for Iran approached. Trump has warned that the US will target Iranian civilian infrastructure, including power plants and bridges, unless Tehran meets his conditions—most notably the reopening of the Strait of Hormuz—by 8 p.m. Eastern Time. He also indicated, however, that negotiations with Iran are progressing well.

The dollar had come under pressure on Monday following reports that the US, Iran, and regional intermediaries were working on a potential 45-day ceasefire and that vessel traffic through the Strait of Hormuz had increased.

Investors are now focused on US durable goods orders data due Tuesday, as well as upcoming inflation figures and the latest FOMC minutes later in the week, for further signals on the strength of the US economy. Markets have fully priced in that the Federal Reserve will leave the federal funds rate unchanged at its meeting later this month, with borrowing costs widely expected to remain on hold for the rest of the year.