The dollar index hovered around 99.8 on the first trading day of April after gaining 2.3% in March, supported by safe-haven demand amid persistent uncertainty over the course of the war in the Middle East. Market participants are weighing President Donald Trump’s assertion that the conflict with Iran could end within weeks against signs of ongoing escalation, including the deployment of additional US troops to the region and the continued near-closure of the Strait of Hormuz.
The dollar also found support as expectations for Federal Reserve rate cuts this year faded, with renewed inflation concerns driven in part by a sharp rise in oil prices linked to the conflict. At the same time, Fed Chair Jerome Powell appeared to calm markets, emphasizing that long-term US inflation expectations remain well anchored.
