The dollar index was firm on Wednesday as renewed tensions in the Middle East and resilient US economic data reinforced demand for the currency.
The lack of progress in US-Iran negotiations, combined with fresh military exchanges across the region, continued to underpin safe-haven flows.
The ongoing tensions have kept energy prices elevated, sustaining concerns that inflationary pressures could persist for longer than previously expected.
This backdrop has continued to support Treasury yields. Expectations continue to point to an interest rate hold from the Federal Reserve, although the institution is anticipated to deliver a rate hike later on, supporting treasury yields and the currency.
The domestic economic picture has also strengthened the higher-for-longer narrative. Tuesday’s JOLTS report showed job openings surged to their highest level in nearly two years, significantly exceeding expectations and pointing to continued strength in the labour market.
Attention now turns to ADP employment figures, the ISM Services PMI, factory orders, and the Federal Reserve’s Beige Book. These releases could offer fresh insight into economic momentum and influence expectations for the future path of monetary policy, potentially generating volatility across both currency and bond markets.
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