FX.co ★ Dollar Strengthens on Safe-Haven Demand

The US dollar index advanced to approximately 98.3 on Monday, building on gains from the previous session. This rise was driven by escalating tensions between Israel and Iran, coupled with an increase in oil prices, which heightened the demand for safe-haven assets. During the weekend, both countries targeted each other's energy infrastructure, intensifying the surge in crude oil prices. Additionally, Iran indicated the possibility of closing the Strait of Hormuz, a crucial global oil transit route, leading to increased concerns about potential global supply disruptions. Such developments are likely to make the Federal Reserve hesitant to further reduce interest rates in the near future, as policymakers contend with risks related to tariffs and inflation. The central bank is broadly anticipated to maintain current interest rates on Wednesday, with market indicators suggesting no likelihood of a cut in July either. Additionally, traders are closely monitoring the release of manufacturing data on Monday, retail sales numbers on Tuesday, and weekly jobless claims on Wednesday to gain further insights into the Federal Reserve's forthcoming decisions.