United States Dollar Index bounces off its lowest level since June 17, back above 100.00
- DXY attracts some buyers and snaps a three-day losing streak to its lowest level since June 17.
- Geopolitical risks offset signs of cooling US inflation and keep bets for a Fed rate hike on the table.
- Escalating US-Iran tensions further support the DXY and contribute to the intraday recovery move.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, gains some positive traction and climbs back above the 100.00 psychological mark during the Asian session on Friday. The index, for now, seems to have snapped a three-day losing streak to its lowest level since June 17, touched on Thursday, though it remains on track to register heavy weekly losses.
The US Personal Consumption Expenditures (PCE) Price Index fell 0.1% in June, marking the first monthly decline since April 2020 as the temporary truce in the Iran war sent gas prices lower. This, in turn, dampened expectations for an immediate interest rate hike by the US Federal Reserve (Fed) and led to the overnight slump in the DXY. However, volatile crude oil prices amid the US-Iran standoff suggest that inflation remains a concern.
In the latest developments surrounding the Middle East crisis, Iran rejected Oman's plan for a 50-50 joint management, which would see Tehran partially control the Strait of Hormuz and collect voluntary fees for using the waterway. Meanwhile, the US military announced it had completed a heavy wave of strikes against Iran, in response to Iranian missile attacks on its forces in the Middle East, dampening hopes for a diplomatic breakthrough.
Meanwhile, Saudi Arabia is building an international coalition to protect key shipping routes in the Bab al-Mandab Strait, the Red Sea, and the Gulf of Aden from repeated attacks by Yemen's Houthi militias. On July 20, the Iran-aligned Houthis declared a maritime embargo against Saudi Arabia, opening a new front in a five-month-old US-Iran war, raising the risk of a wider regional conflict and keeping geopolitical risk premium in play.
This continues to act as a tailwind for crude oil prices, and fuels worries about reviving inflationary pressures. Moreover, the core US PCE remains well above the Fed 2% target, leaving the door open for at least one rate hike by the year-end. This might hold back traders from placing fresh bearish bets on the DXY and warrants some caution before positioning for an extension of this week's sharp retracement slide from the highest level since June 25.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.07% | 0.63% | 0.02% | 0.04% | 0.25% | 0.10% | |
| EUR | -0.08% | -0.04% | 0.55% | -0.06% | -0.03% | 0.15% | 0.03% | |
| GBP | -0.07% | 0.04% | 0.56% | -0.06% | -0.03% | 0.17% | 0.06% | |
| JPY | -0.63% | -0.55% | -0.56% | -0.58% | -0.56% | -0.37% | -0.49% | |
| CAD | -0.02% | 0.06% | 0.06% | 0.58% | 0.02% | 0.23% | 0.10% | |
| AUD | -0.04% | 0.03% | 0.03% | 0.56% | -0.02% | 0.20% | 0.07% | |
| NZD | -0.25% | -0.15% | -0.17% | 0.37% | -0.23% | -0.20% | -0.11% | |
| CHF | -0.10% | -0.03% | -0.06% | 0.49% | -0.10% | -0.07% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
