The U.S. Dollar Index was trading below 98 on Wednesday, following two consecutive days of decline. This drop was attributed to decreased demand for safe-haven assets as geopolitical tensions in the Middle East showed signs of easing. A U.S.-mediated ceasefire between Israel and Iran was largely holding despite some isolated incidents, leading to a significant drop in oil prices from recent peaks. However, geopolitical uncertainty persisted after reports indicated that U.S. missile strikes had only partially affected Iran's nuclear facilities, merely setting back Tehran's nuclear ambitions temporarily.
In parallel, investors were processing recent comments from Federal Reserve Chairman Jerome Powell. He reiterated the Federal Reserve's dedication to maintaining inflation control. Powell suggested that interest rates would likely remain unchanged until there was more clarity on the impact of tariffs on prices. Nevertheless, market sentiment still reflected nearly a 20% chance of an interest rate cut as early as July. Looking forward, investors were anticipating Powell's upcoming testimony before the Senate, along with the release of data on new home sales.
