US Dollar holds six week high on rate hike bets
The U.S. dollar is trading near a six-week peak as investors anticipate potential interest rate hikes to combat inflation driven by the ongoing Iran war. Market sentiment remains cautious with the Japanese yen approaching intervention levels and Treasury yields hitting multi-year highs.
The United States dollar held near a six-week high on Wednesday as war-driven inflation fears fueled bets on higher interest rates. The currency index remained steady at 99.306, gaining more than 1% in May. Investors are pivoting from expected rate cuts to pricing in an over 50% chance of a December hike to combat rising energy costs.
### War Uncertainty Drives Safe-Haven Demand Persistent conflict involving Iran has triggered a global bond selloff and pushed the 30-year Treasury yield to its highest level since 2007. While President Donald Trump suggested a potential deal to end the war, he noted the U.S. may strike again if necessary. This geopolitical tension has kept Brent Crude Oil at $110.8 per barrel, well above levels recorded when the war started at the end of February.
