The dollar index climbed to 99.4 on Tuesday as traders continued to weigh the evolving conflict with Iran and the outlook for de-escalation. While reports highlight ongoing communication and diplomatic efforts to halt the war, hostilities have persisted despite President Trump’s announcement of a five-day pause.
Heightening concerns, the Wall Street Journal reported that Saudi Arabia and the UAE are moving closer to joining the conflict against Tehran. Iran has maintained its attacks on US bases in the Gulf and insists that no negotiations with Washington are underway.
Oil prices continue to rise, though at a slower pace, sustaining upward pressure on inflation. Against this backdrop, traders have largely abandoned expectations of any Federal Reserve rate cuts this year. Last week, the Fed left the federal funds rate unchanged, citing uncertainty over the economic impact of the Middle East conflict on the US. Policymakers still projected one quarter-point rate cut in 2026 and another in 2027.
