Viewpoint: Due to heightened inflation concerns and a significant downward revision in expected interest rate cuts, the US dollar may see its largest gain in a year
Odaily News The escalating conflict in Iran has led to a surge in energy prices and intensified inflation concerns, putting the US dollar on track for its strongest two-day rally in nearly a year.
On Tuesday, the Bloomberg Dollar Spot Index rose 0.8%, pushing US Treasury yields to a three-week high and sharply reducing market expectations for Federal Reserve rate cuts this year to just 37 basis points—down from 60 basis points last Friday. Crude oil prices surpassed $85 per barrel for the first time since July 2024, while European natural gas prices surged over 40%, reaching their highest level since 2023.
As real-money investors sold off long positions in the euro and pound, signals from dollar options and risk reversals shifted sharply bullish, marking the largest move since June. Most G10 currencies fell by 1% or more.
