United States Dollar Index trades calm while US-Iran deal uncertainty escalates

The US Dollar (USD) trades quietly in the Asian trading session on Wednesday, even as uncertainty surrounding the United States (US)-Iran deal has escalated, following the exchange of attacks between the two.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades almost flat near 99.25.

Late Tuesday, the US Central Command (CENTCOM) said that it had intercepted and defeated a series of Iranian missile and drone attacks targeting regional neighbors, including Kuwait and Bahrain, while also carrying out self-defense strikes on Iran’s Qeshm Island.

This has renewed fears of a Middle East war resumption, a scenario that will boost oil prices again and strengthen the US Dollar.

The US Dollar outperformed in wartime as higher oil prices prompted global inflationary pressures, which forced traders to price out dovish Federal Reserve (Fed) bets.

On the domestic front, investors await the US ADP Employment Change and the ISM Services Purchasing Managers’ Index (PMI) data for May, which will be published during the North American session.

Meanwhile, the US JOLTS Job Openings data for April came in stronger-than-expected on Tuesday. The data showed that US employers posted 7.618 million fresh jobs, significantly higher than 6.88 million estimates.

This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for May, which will be released on Friday.