USD index hits 3-week high on Middle East tensions, strong US data
The dollar index advanced 0.06% to a three-week high at 104.35, driven by safe-haven demand following weekend US strikes on Iranian nuclear facilities. Supporting the greenback's strength, US Manufacturing PMI surprised to the upside at 51.2 versus 50.8 expected, while existing home sales jumped 3.4% month-over-month. The geopolitical premium has pushed USD/JPY down 0.3% to 154.20 as both safe havens attract flows, while EUR/USD dropped 0.2% to 1.0780. Risk-sensitive pairs like AUD/USD and NZD/USD fell 0.4% and 0.5% respectively as investors reduced exposure to commodity currencies. Technical analysis shows the dollar index testing resistance at 104.50, with a break potentially targeting 105.00. Traders remain cautious ahead of Wednesday's FOMC minutes, which could provide clarity on the Fed's rate trajectory amid escalating Middle East tensions.
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