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The dollar remained firm on Thursday, while Treasury yields edged higher.
Escalating tensions in the Middle East and supply disruptions continue to propel energy prices upward, raising fears of inflationary pressures and keeping yields supported.
Markets could continue to reassess the odds of a Federal Reserve monetary policy easing, gradually reducing the number of interest rate cuts expected.
Geopolitical tensions could also continue to drive demand for the dollar as a safe-haven asset.
While the latest inflation data in the US came up in line with expectations, attention could remain focused on the impact of rising oil prices. Core inflation for February cooled to 0.2%, while headline inflation rose to 0.3% on a monthly basis.
Looking ahead, the focus could turn to this week’s key economic data, including GDP growth and PCE figures, which could influence the Fed’s next move and market expectations. Signs of an economic slowdown or disinflation could put pressure on the dollar.
However, the developments in the Middle East could continue to be the main driver for the currency. In the meantime, today’s initial jobless claims could also introduce volatility into the markets.
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