The dollar index rose to around 101.2 on Tuesday and is on track for a second consecutive monthly gain, buoyed by expectations that the Federal Reserve will deliver multiple interest rate hikes this year. The index is up more than 2% so far this month, positioning it for its strongest monthly performance since July of last year. Markets are currently pricing in three Fed rate increases in 2026, with the first potentially coming in September. Investors are now turning their attention to the upcoming US nonfarm payrolls report for additional signals on the Fed’s policy trajectory.
On the geopolitical front, the US and Iran were set to resume peace talks in Doha after a pause in recent hostilities, though the outlook for a durable ceasefire remains uncertain. A key sticking point persists after Tehran reaffirmed its intention to control traffic through the Strait of Hormuz, even if Oman chooses not to take part.
