FX.co ★ Dollar Strengthens on Middle East Uncertainty

The dollar index inched up to 98.7 on Tuesday, nearing a three-week high, as persistent tensions in the Middle East and higher oil prices reignited concerns about a possible inflationary spiral. The White House said President Trump would address Iran’s proposal to reopen the Strait of Hormuz “very soon,” although the plan sidesteps the nuclear issue until hostilities in the Gulf ease. Meanwhile, the Fed’s two-day policy meeting begins today. Policymakers are widely expected to leave the federal funds rate unchanged, with no further adjustments anticipated for the rest of the year. The ECB and the BoE are also due to announce policy decisions, with money markets pricing in potential rate hikes as early as June. In Asia, the BoJ kept rates steady, and Governor Ueda offered little clarity on the timing of future increases, weighing on the yen. The dollar recorded its strongest gains against the euro, the pound, and the Australian dollar.