The dollar index hovered around 98.5 on Thursday, holding at more than one-week highs as stalled peace efforts between the US and Iran underpinned safe-haven demand for the greenback. The Strait of Hormuz remains effectively closed, with Tehran maintaining control of the strategic waterway and seizing two vessels, while a US blockade of Iranian ports persists. These developments are supporting elevated energy prices and heightening inflation risks.
At the same time, President Donald Trump said the current truce would remain in place indefinitely as Washington awaits a new peace proposal from Iran. Ongoing inflation concerns have strengthened expectations that the Federal Reserve will leave interest rates unchanged this year, while Fed nominee Kevin Warsh vowed to safeguard the central bank’s independence from the White House. Investors are now focused on weekly jobless claims and upcoming PMI data for additional insight into the US economic outlook.