The US dollar continued to trade within a range on Thursday as sentiment remained cautious amid limited progress in the Middle East.
Optimism that Washington could move closer to an agreement with Tehran helped cap additional gains in the currency and reduce immediate safe-haven demand. However, markets remain cautious given the uncertain path of negotiations.
Signs of progress could pressure the dollar, while any deterioration in talks would likely support both the currency and Treasury yields through renewed inflation concerns and risk aversion.
At the same time, the Federal Reserve’s latest meeting minutes reinforced a more hawkish tilt in expectations. Policymakers expressed growing concern that elevated oil prices could sustain inflationary pressures, with an increasing number signalling openness to further monetary policy tightening if required. As a result, Treasury yields could remain elevated, supporting the dollar.
Attention now turns to initial jobless claims and PMI figures. While jobless claims have edged higher in recent weeks, broader labour market conditions remain resilient. Any meaningful surprises from today’s releases could influence expectations around monetary policy and inject fresh volatility into both currency and bond markets.
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