FX.co ★ Dollar Rises on Middle East Escalations

On Monday, the US dollar index ascended to approximately 99, building on gains from the previous week. This increase was driven by heightened demand for safe-haven assets following US airstrikes on three Iranian nuclear facilities over the weekend. The market was taken by surprise, as President Donald Trump had indicated on Friday that any decision regarding Iran might occur "within the next two weeks," sparking hopes for a diplomatic resolution. Investors are now preparing for a potential reaction from Tehran, which could include attacks on US personnel in the area or disruptions to global oil shipments through the Strait of Hormuz. Meanwhile, attention is also directed toward upcoming US economic data releases, such as existing home sales and Purchasing Managers' Index (PMI) figures, which may provide new insights into the health of the economy. Last week, the Federal Reserve maintained interest rates and adopted a cautious, data-driven approach in light of the escalating geopolitical tensions and prevailing economic uncertainty. Fed Chair Jerome Powell cautioned that inflation might rise in the coming months, partly as a result of the inflationary pressures from Trump's tariffs.