The dollar index hovered above 99 on Wednesday after sharp swings earlier in the week, as investors weighed the prospects for a US–Iran peace agreement amid renewed tensions in the Middle East. President Donald Trump said talks to extend a ceasefire and reopen the Strait of Hormuz were ongoing, while US Secretary of State Marco Rubio warned that any final agreement could still be several days away.
The US military reported conducting self-defense strikes in southern Iran, while Iran’s Revolutionary Guard claimed it had targeted an F-35 fighter jet and several drones after they allegedly entered Iranian airspace. At the same time, Treasury yields continued to decline as markets further scaled back expectations for near-term Federal Reserve interest rate hikes. Investor attention is now turning to upcoming PCE inflation data for additional insight into the Fed’s future policy path.
