US Dollar Index Holds Above 99.00 as Geopolitical Tensions and Fed Support Boost Demand

US Dollar Index (DXY) Stays Firm Above 99.00 on Middle East Crisis and Fed Tone

The US Dollar Index (DXY) remained resilient at just above 99.00 on Monday during the Asian session, holding near a two-week high. Market sentiment shifted sharply risk-off after the US military bombed three Iranian nuclear facilities over the weekend, joining Israel’s offensive.

This aggressive escalation drove traders to seek safety in the Greenback, reinforcing the USD's role as a global reserve currency.

Geopolitical Risk Powers Safe-Haven Demand

The fresh US-Iran conflict has raised fears of a wider regional war, especially after Iran’s Foreign Minister Abbas Araghchi called the attacks “outrageous” with “infinite consequences.” Global markets reacted swiftly, sending equities lower and pushing haven assets—including the USD and Gold—higher.

“With the Strait of Hormuz now under potential threat and global risk sentiment deteriorating, the USD is naturally the beneficiary,” analysts commented.

Hawkish Fed Rhetoric Offers Further Lift

In addition to geopolitical support, the Federal Reserve’s hawkish policy stance from last week continues to bolster the dollar. Fed officials lowered their forecast to only one rate cut in both 2026 and 2027, a signal that higher-for-longer interest rates are on the table.

Markets are now eyeing flash US and global PMIs due later Monday for short-term direction, particularly in the face of unresolved global trade uncertainties.

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