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Dollar rebounds as Iran tensions lift yields and safe-haven demand

The ICE US Dollar Index was around 99.71, up about 0.30% on the day, while the 10-year Treasury yield traded near 4.80% after rising on hawkish Fed expectations.

Reported · Written up by our desk · Major Pairs

The US Dollar Index reversed the prior day’s losses on Tuesday, helped by higher US Treasury yields and safe-haven flows amid fresh fighting between the United States and Iran, according to FXStreet. At the time of writing, the DXY was around 99.71, up roughly 0.30% on the day, after the outlet cited Reuters reporting that the US military began striking Islamic Revolutionary Guard Corps targets inside Iran at 16:00 GMT. Iranian media reported explosions on Qeshm Island and in southern cities including Bandar Abbas and Chabahar. Rising energy prices added to broader inflation concerns, FXStreet said, noting West Texas Intermediate climbed to its highest level since July 24 and traded around $88.70 per barrel. The stronger outlook for borrowing costs followed hawkish Federal Reserve expectations, with the benchmark 10-year Treasury yield trading around 4.80%, its highest level since January 2025. FXStreet also pointed to CME FedWatch, where traders saw about a 68% probability of a rate increase at the September 15-16 meeting, up from roughly 40% a week earlier. Softer US data briefly weighed on the dollar, with the ISM Manufacturing PMI falling to 54.6 in August from 55.6 in July, though JOLTS job openings rose to 7.271 million in July from 7.182 million, and attention shifts next to ADP Employment Change on Wednesday and the Nonfarm Payrolls report on Friday.

Latest closeDollar index 99.65 ▲0.2%

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