FX.co ★ Dollar Steadies on US-Iran Uncertainty

The dollar index stabilized above 99 on Tuesday after coming under pressure at the start of the week, as US military operations in southern Iran and ongoing peace talks kept investors wary of inflation risks. US forces reportedly struck vessels suspected of attempting to deploy mines, as well as missile launch sites in southern Iran that allegedly threatened American troops in the region. Meanwhile, President Trump said negotiations with Tehran were making good progress, but cautioned that additional strikes could follow if talks broke down, while a Pakistani mediator reportedly told China that a deal was close. Last week, the dollar rose to a six-week high as investors increasingly wagered that the Federal Reserve may need to tighten monetary policy to rein in inflation, with markets fully pricing in a rate hike before year-end. Market focus is now shifting to upcoming PCE inflation data for further clues on the Fed’s policy outlook.