Precise Investors Editorial Team
The dollar on Tuesday closed out March with its best monthly performance since July last year
The U.S. dollar weakened on Wednesday, sliding to a one-week low, as hopes for a potential end to the Middle East war sapped the currency’s recent safe haven appeal.
At 21:10 GMT, the US Dollar Index was down 0.4% to 99.65.
The dollar on Tuesday closed out March with its best monthly performance since July last year.
With oil prices surging due to supply disruptions from the closure of the Strait of Hormuz, the potential inflationary shock has led investors to sharply recalibrate their expectations for interest rate cuts from central banks, and even increase their odds for rate hikes.
Higher rates for longer tend to strengthen the dollar, making it an attractive safe haven asset during the current Middle East war. The dollar has also been boosted by the U.S. being a net energy exporter and by a rush for cash.
The Dollar Index had been a major beneficiary of Middle Eastern hostilities. This time last month it soared as investors bought up dollars in a flight to safety, spurning previous havens such as precious metals, U.S. Treasuries and currencies such as the Japanese yen and Swiss franc, David Morrison, senior market analyst at Trade Nation, said.
It finally looked as if the Index had broken decisively above long-term resistance at 100.00 thereby signalling that the U.S. dollar may have finally put in a bottom after a dismal twelve months. But it now looks as if the dollar bulls will have to sit on their towels and hope for a different signal to indicate that it’s safe to go back in the water, Morrison added.
The euro EUR/USD, sterling GBP/USD, and yen USD/JPY were last little changed on Wednesday.
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