Dollar eases as Middle East peace hopes offset Fed bets
The U.S. dollar index dropped 0.24% to 99.77 as potential for a deal to reopen the Strait of Hormuz outweighed hawkish sentiment following strong May jobs data. Investors are shifting focus toward upcoming U.S. inflation figures and the European Central Bank policy meeting for further direction on global interest rate paths.
The United States dollar fell 0.24% to 99.77 on Tuesday as easing Middle East tensions reduced safe-haven demand. The currency retreated from a peak of 100.21 reached the previous day, though it remains near its late March high of 100.64. This shift suggests investors are pivoting from geopolitical hedging to interest rate differentials ahead of critical economic data.
### Middle East De-escalation Pressures Dollar Hopes for a deal to reopen the Strait of Hormuz prompted traders to sell the greenback against the euro and yen. Iran and Israel halted direct attacks on Monday following an appeal from the U.S. presidency. This pause in hostilities suggests a potential cooling of energy supply risks that previously drove investors toward the dollar.
