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Escalating geopolitical risk continued to dominate global markets’ concerns, with safe-haven demand keeping the dollar index anchored near a multi-week high.
However, US Treasury yields edged lower for a second session, which could weigh on the dollar to a certain extent. Recent commentary from the Federal Reserve Chair has led markets to scale back expectations for a tighter monetary policy.
Investors are now focused on upcoming consumer confidence and job openings data for further clues on the health of the US economy.
The data due later today will be scrutinised for any signs of labour market cooling or weakening consumer sentiment that could shift the policy outlook.
Looking ahead, the dollar’s trajectory will hinge on the interplay between geopolitical developments and incoming US data. If tensions in the Middle East escalate further, the greenback is likely to retain its safe-haven premium. Conversely, any signs of de-escalation or a sharp deterioration in US macro data could prompt a reassessment of the dollar’s recent gains and open the door to a further pullback in yields.
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