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US dollar holds near six-week high as US data and Iran doubts lift demand
Dollar Index at 99.24, near six-week high. Resilient US data and stalled Iran talks keep safe-haven bids intact. Next US data prints and Iran progress will determine if the 99.50 break holds.
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The US dollar held near a six-week high on Friday, with the Dollar Index trading at 99.24, little changed on the session and just below Thursday's peak of 99.515 – the strongest reading since April 7. Two forces are supporting the greenback: a run of resilient US economic data that challenges dovish Fed expectations and lingering uncertainty over US–Iran talks that keeps safe-haven demand intact.
The combination matters because it directly disrupts the market's dominant 2025 trade. Earlier in the year, the consensus centred on a softer dollar as the Fed pivoted to rate cuts and global risk appetite improved. That narrative relied on a weakening US data flow and a de-escalation in geopolitical tensions. Instead, the data has surprised to the upside, pushing back against the implied rate path, while the Iran negotiations remain stalled, keeping a tailwind under the dollar.
The Data Path and the Fed’s Dovish Bets
The string of stronger-than-expected US economic releases has two direct transmission channels. First, it reduces the probability of a June rate cut, widening the short-term yield advantage for the dollar. Second, it pulls breakeven inflation expectations lower, making nominal yields more attractive on a real basis. This combination – higher relative yields and a more hawkish policy skew – supports capital inflows into dollar-denominated assets.
The Dollar Index is now testing resistance near the 99.50 area, a level that previously capped rallies in April and May. A clean break above 99.515 would target the 100.00 handle, a zone that has not been sustained since November 2024. The next US releases – weekly jobless claims, ISM services data, and personal spending figures – will determine whether the data momentum is enough to push rates expectations further toward a hawkish repricing.
Iran Talks and Safe-Haven Demand
The stalemate in the US–Iran nuclear negotiations adds a second layer of support for the dollar that operates through risk appetite rather than rates. When talks stall, the probability of a near-term deal drops, reducing the likelihood of Iranian oil returning to global markets and keeping energy prices elevated. Higher oil prices weigh on current account deficits in Europe and Asia, putting pressure on the euro and yen, while the dollar absorbs safe-haven premiums.