FX.co ★ Dollar Strengthens on Inflation Worries

The dollar index firmed to around 99.9 on Wednesday after briefly dipping to 99.5 earlier in the session, as concerns about persistent inflationary pressures intensified. Oil prices rose again after Iran reported attacks on some of its energy facilities, further stoking inflation fears. At the same time, US producer prices for February exceeded expectations, with headline PPI up 0.7% month-on-month and core PPI rising 0.5%, both above the 0.3% consensus forecast. The figures underscored that inflation remains elevated even beyond energy-related factors. Attention now turns to the Federal Reserve’s policy decision later in the day. While the fed funds rate is widely expected to remain unchanged, markets will closely examine updated economic projections and Chair Powell’s remarks for clues on how escalating tensions with Iran might shape the policy outlook. The dollar strengthened broadly, posting its largest gains against the Australian dollar.