U.S. Dollar Gains on Fed Rate‑Hike Bets and Iran‑Oman Tensions

The U.S. dollar index edged higher this week despite a modest intraday dip, buoyed by expectations of tighter Federal Reserve policy and safe‑haven demand linked to uncertainty over a proposed Iran‑Oman agreement. Weaker‑than‑expected U.S. ADP employment and ISM services data added pressure on the greenback, while Fed officials such as Kansas City President Jeff Schmid and Minneapolis President Neel Kashkari reiterated the need for further tightening.

Currency markets reflected the mixed signals: the dollar rose against the euro and the yen, with USD/JPY trading near 158 after a coordinated U.S.–Japan intervention lifted the yen about 3.5% and halted its slide from a 13‑week low. The intervention, involving the U.S. Treasury and Japan’s Ministry of Finance, aimed to curb a rapid yen depreciation that had threatened regional export competitiveness.

Geopolitical risk from the Iran‑Oman deal, which could give Tehran greater control of the Strait of Hormuz, kept risk‑off sentiment high, supporting the dollar and pushing Brent crude above $83 a barrel. Market participants await the upcoming U.S. non‑farm payroll report for further clues on the Fed’s rate‑path.