The dollar index held above 100 on Tuesday and was on track for a monthly gain of nearly 3%, supported by safe-haven demand as the prolonged Middle East conflict drove oil prices higher and fueled stagflation fears. The war involving Iran has now entered its fifth week with no signs of de-escalation, while Tehran has effectively closed the Strait of Hormuz and issued threats against Red Sea shipping. President Donald Trump warned of strikes on Iranian energy infrastructure unless Hormuz is reopened, overshadowing earlier indications of a potential deal with Iran.
At the same time, Federal Reserve Chair Jerome Powell said long-term US inflation expectations remain anchored despite elevated geopolitical uncertainty in the Middle East, and noted that the Fed’s current policy stance gives officials room to monitor and assess the economic fallout from the Iran war. Investors are now awaiting the release of March’s consumer confidence index and February’s JOLTS job openings data.
