US Dollar Index climbs above 98.00 amid deteriorating US-Iran peace optimism

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is gaining ground for the second successive day and trading around 98.10 during Asian hours on Tuesday.

The Greenback strengthens on the back of intensifying geopolitical risks. Global investors are pivoting toward safe-haven assets following reports of deteriorating diplomatic relations in the Middle East. The shift in sentiment comes as market participants weigh the possibility of a return to major combat operations, a move that typically triggers a flight to quality and bolsters the Greenback against more sensitive currency valuations.

According to a CNN report released Monday, US President Donald Trump has expressed growing frustration over the current state of negotiations to end regional hostilities. Aides suggest that the administration is now more seriously considering a resumption of military action than in previous weeks. Compounding these fears, Iranian Parliament speaker Mohammad Bagher Ghalibaf warned via Reuters that Iran’s military remains fully prepared to retaliate against any future strikes, putting the region’s fragile ceasefire under immense strain.

Investors are closely watching April’s consumer inflation report due on Tuesday for insight into how the war with Iran is impacting the economy and influencing Federal Reserve policy. Additionally, President Trump’s high-stakes meeting with Chinese President Xi Jinping this week is expected to center on trade, artificial intelligence, and global energy security.