The US dollar index remained below 98 on Wednesday after falling for two straight sessions, weighed down by reduced haven demand amid easing geopolitical risks in the Middle East. A US-brokered ceasefire between Israel and Iran appeared to be holding despite minor flare-ups, with oil prices retreating sharply from recent highs.
Still, geopolitical uncertainty lingered after intelligence reports suggested that US missile strikes only partially damaged Iran’s key nuclear facilities, merely delaying Tehran’s nuclear program.
Meanwhile, investors digested fresh remarks from Fed Chair Powell, who reaffirmed the Fed’s commitment to keeping inflation under control.
Powell indicated that rates are likely to remain unchanged until the impact of tariffs on prices becomes clearer.
Despite this, markets continue to price in nearly a 20% probability of a rate cut as soon as July.
Looking ahead, investors await Powell’s testimony before the Senate later in the day, alongside new home sales data.