- US Dollar Index drifts lower to around 98.80 in Wednesday’s early European session.
- Trump stated the war could end “very soon, but gave no clear timeline for halting attacks.
- The US February CPI inflation report will be in the spotlight later on Wednesday.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 98.80 during the early European trading hours on Wednesday. The DXY declines following US President Donald Trump’s signal that the ongoing Middle East conflict could end soon.
Trump said during a press conference on Monday that the war against Iran will end “very soon” and also said that oil prices will drop. Additionally, the US indicated it was considering seizing control of the Strait of Hormuz to ensure the flow of tankers, easing fears of a spike in oil prices. This, in turn, drags the US Dollar lower against its rivals as safe-haven demand fades.
Nonetheless, Trump gave no clear timeline for halting attacks that have rattled the Middle East and global markets, and the Israeli military launched a fresh wave of strikes at Iran and Lebanon. Uncertainty surrounding the Middle East conflicts could underpin the DXY in the near term.
The US President said that the war would be over when Iran no longer had the capacity to use weapons against Washington, Israel, and other allies for a long time. Meanwhile, the Islamic Revolutionary Guard Corps (IRGC) escalated its operations against the US and Israel. The IRGC announced the start of targeting the enemy’s technological infrastructure in the region.
Traders brace for the US February Consumer Price Index (CPI) inflation report later on Wednesday for more clues about the US interest rate path. The headline CPI is projected to show an increase of 2.4% year-over-year in February. The core CPI, which excludes the often-volatile food and energy categories, is expected to show a rise of 2.5% during the same period. If the reports show softer-than-expected outcomes, this could weigh on the Greenback.
