U.S. Dollar Ticks Higher As Easing Middle East Tensions Lowers Fed Rate Hike Expectations

(RTTNews) - The U.S. Dollar value ended nearly flat following the U.S. decision to halt strikes on Iran after 13 consecutive nights of bombardment and prioritize peace talks over military aggression to end the conflict. With supply-related concerns disappearing, crude oil prices plummeted, lowering concerns of rate hike in the U.S.

The U.S. Dollar Index, DXY, which measures the Greenback against a basket of other major currencies was last seen trading at 101.53, up by 0.07 (or 0.07%) today.

While against the Euro, the USD was trading at 1.137, up by 0.02%, against the GBP, the USD was trading at 1.323, up by 0.26%.

Against the USD, the Japanese Yen was trading at 163.741, up by 0.05%, the Swiss Franc was trading at 0.819, down by 0.19%; and the Canadian Dollar was trading at 1.412, down by 0.23%.

Against one unit of Australian Dollar, the USD was trading at 0.699, down by 0.15%.

In the Middle East conflict which broke out on February 28, last Friday, U.S. President Donald Trump threatened that he was considering a massive attack on Iran on a never-before-seen scale, triggering concerns of an expansive war.

However, citing two sources, Axios reported that the top military commander in the Middle East Admiral Brad Cooper suggested to Trump to halt the bombing campaign around the Strait of Hormuz region as its effectiveness has plateaued.

Separately, the New York Times reported that the Chairman of the Joint Chiefs of Staff General Dan Caine cautioned Trump and U.S. Defense Secretary Pete Hegseth in private that the U.S. was running out of air defense interceptors which could weaken the U.S. ability to protect its forces.

Yesterday, in NBC's "Meet the Press", U.S. ambassador to the U.N., Mike Waltz stated that Trump wants to give talks with Iran some space.

After 13 consecutive nights of attack on Iran, U.S. forces did not launch any fresh strike over the past three nights.

Currently, the ground situation in the gulf is calm after both sides paused mutual attacks. The easing of tension restricted the safe-haven demand for the U.S. dollar.

In addition, with supply disruption concerns disappearing, crude oil nosedived by more than 6% and lowered oil-linked inflationary pressure.

Addressing reporters today, Trump remarked that the U.S. has plenty of time for any decision on Iran.

Adding that currently the U.S. is engaged in talks with Iran, Trump hinted that there is a good chance something positive can happen.

Later in an interview with Axios, Trump stated that he paused the attacks to offer negotiations another chance. However, he added that he may return to expanded military actions if diplomacy fails.

With the U.S. Federal Reserve's two-day meeting scheduled for tomorrow, Trump stressed again that the U.S. should have the world's lowest interest rates.

A majority of economists expect no change in interest rates while some speculate a surprise hike in rates. However, any prediction for lowering of rates has currently disappeared.

Currently, investors are betting on a 37.90% chance of a quarter-basis-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on July 28-29 while the odds on rates being held at the current level stand at 62.10%, according to the CME Group's FedWatch Tool.