The U.S. dollar began the new week on a positive note, supported by increased demand for safe-haven assets amid escalating regional tensions and continued backing from the Federal Reserve’s hawkish monetary stance. This momentum pushed the U.S. Dollar Index (DXY), which measures the currency’s performance against a basket of major peers, to its highest level in nearly two weeks during Monday’s Asian trading session.
Despite opening with an upward gap, the index gradually lost steam and settled just above the 99 mark, posting a daily gain of over 0.25%. This performance comes at a time of mounting global uncertainty, reinforcing investors’ preference for defensive currencies chief among them, the U.S. dollar.
Recent developments in the Middle East have heightened market caution, with concerns over potential wider escalation threatening regional stability. This has increased demand for traditional safe haven assets, including the dollar. Official warnings and statements have further elevated market sensitivity and limited investor appetite for risk.
At the same time, the Federal Reserve has maintained its hawkish outlook. Its latest projections indicate limited room for interest rate cuts in the longer term, highlighting a continued focus on inflation control and monetary stability offering the dollar additional support.
Nevertheless, global economic policy challenges and signs of slowing indicators are weighing on investor sentiment and curbing enthusiasm for dollar denominated assets. Markets remain alert to potential international responses that could reshape broader market trends.
In this context, traders are closely watching the release of preliminary global Purchasing Managers’ Index (PMI) data this week. These figures are expected to offer key insights into the health of the global economy and could help guide the next phase of market movement and the dollar’s trajectory.
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