FX.co ★ Dollar Steadies as US Tightens Iran Sanctions

The dollar index stabilized around 99 on Tuesday, holding its gains from the previous session as safe-haven demand firmed after Washington moved to further cut Iran off from the global financial system. The measures underscored the US currency’s central role in international trade and finance.

Treasury Secretary Scott Bessent on Monday outlined plans to tighten Iran’s isolation through sanctions aimed at countries that continue to do business with the Islamic Republic.

Even so, the dollar hovered near three-month lows after the Treasury Department said it would expand its buyback program for long-dated US government debt in an effort to rein in rising borrowing costs. Market participants questioned how long such measures could remain effective, viewing the plan as potentially only a short-term fix and reviving concerns about the risk of a US debt crisis and longer-run dollar weakness.

Investors now turn their attention to the upcoming US PCE price index release and a speech by Fed Chair Kevin Warsh at the Jackson Hole economic symposium later this week, seeking fresh signals on the Federal Reserve’s policy path.