The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, retraced its recent gains and traded around 98.70 during Asian hours on Wednesday (6/18). Markets expect the US Federal Reserve (Fed) to keep interest rates unchanged at its June meeting scheduled for Wednesday. Traders now see a near 80% chance of a Fed rate cut in September, followed by another cut in October, according to Reuters.
Traders are likely to closely monitor the Federal Open Market Committee (FOMC) statement on monetary policy, looking for direction going forward amid persistent tariff uncertainty and rising geopolitical tensions.
The greenback faced challenges from weaker-than-expected US economic data released on Tuesday. US Retail Sales fell by 0.9% in May, worse than the 0.7% decline expected and the 0.1% decline in April (revised from +0.1%). Meanwhile, Industrial Production also fell by 0.2%, compared to a 0.1% increase, which was a change from the previous growth of 0.1%.
The US dollar may strengthen again due to increased demand for safe havens amid rising geopolitical tensions in the Middle East. Israel and Iran continue their cycle of retaliation. However, Tehran has reportedly urged several countries, including Oman, Qatar, and Saudi Arabia, to urge US President Donald Trump to immediately declare a ceasefire.
On Tuesday, US President Donald Trump posted on his social media platforms, calling for Iran's "unconditional surrender." Investors are worried that the United States will get involved in the Israel-Iran conflict. (alg)
Source: FXstreet
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