The dollar index held above 101 on Wednesday after gains in the previous session, supported by renewed safe-haven demand as the US military launched new air strikes on Iran following recent attacks on vessels transiting the Strait of Hormuz. The latest escalation threatened the interim US-Iran peace deal aimed at ending the war and pushed oil prices higher, fueling inflation concerns and increasing the likelihood of further interest rate hikes.
At the same time, investors were awaiting the minutes of the Federal Reserve’s June meeting for additional signals on the policy outlook, after the central bank struck a more hawkish tone at its June policy meeting. Markets are now pricing in roughly a 50% probability of a Fed rate hike in September, up from about 46% the previous day. Elsewhere, data released on Tuesday showed that the US trade deficit widened to $77.6 billion in May, the largest shortfall since March 2025.
