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Dollar index edges higher as Middle East escalation worries lift safe haven demand

The US Dollar Index, a gauge versus six major currencies, was up 0.12% to about 100.92 in the Asian session.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the greenback against six major currencies, traded 0.12% higher to around 100.92 in the Asian session, following a sharp drop the prior day, according to FXStreet.

FXStreet said concerns about further escalation in the Middle East improved the dollar’s safe-haven appeal. It noted that US Central Command began launching strikes against Iran late Wednesday, after retaliating for Iranian missile attacks on American forces in the region, in connection with a Trump threat to accelerate retaliation.

The dollar’s earlier weakness came after the Federal Reserve left interest rates unchanged in the 3.50% to 3.75% range, marking the fifth straight meeting with no change. Three of 12 FOMC members dissented, voting for a 25-basis-point rate hike, and FXStreet said Fed Chairman Kevin Warsh’s remarks indicated limited tolerance for inflation above the 2% target.

FXStreet added that the Fed deliberates on monetary policy at eight scheduled meetings per year and must balance keeping inflation at 2% with maintaining full employment, with interest rates its primary policy tool. It said higher rates typically strengthen the US dollar by attracting capital.

Latest closeDollar index 100.80 ▼0.6%

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