News
Dollar Index · Energy Prices · Geopolitics · Inflation
The US Dollar Index (DXY) appreciated 1.5% over three days, driven by escalating Middle East geopolitical volatility and energy logistics disruptions, which ignited fears of a renewed inflationary cycle.
Tensions in the Middle East, including the closure of the Strait of Hormuz by Iranian forces following US-Israel military strikes, compromised global energy supply. Reuters reported Iraq, OPEC's second-largest producer, slashed production by 1.5 million to 3 million barrels per day due to storage issues, compounded by refinery closures in Saudi Arabia, Israel, and Qatar.
Consequently, Brent crude surpassed $80 per barrel, West Texas Intermediate approached $75, and gasoline futures appreciated 25% over three days. This spike in energy costs reignited US inflation concerns, shifting CME FedWatch Tool expectations for interest rate cuts to July and December from June and October.
The Federal Reserve will adopt a "higher-for-longer" stance or consider more restrictive policies. Technically, the DXY trades above its 50, 100, and 200-day Simple Moving Averages, with MACD and RSI indicating strengthening short-term bullish momentum.
Dollar Strengthens; Energy Prices Stoke Inflation Fears(current)