FX.co ★ DXY Holds Pullback

The dollar index fell to 99.5 on Wednesday, extending its pullback from Monday’s ten-month high of 100.5, as indications that the United States is working to restore vessel traffic in the Middle East eased safe-haven demand for the greenback. President Trump said that Iran had requested a ceasefire on its own terms, while warning that Washington would escalate the conflict if Tehran continued to attack ships transiting the Strait of Hormuz. Major currencies fluctuated in response to the remarks, which combined signals of potential de-escalation with explicit threats of further escalation.

Last month, the dollar index rose 2.3% as investors sought refuge in the US currency amid fears of a protracted war. The greenback also drew support from fading expectations of Federal Reserve rate cuts this year, as the conflict pushed oil prices sharply higher and reinforced inflation concerns.