US Dollar Index strengthens toward 99.00 amid Middle East unrest and strong US services figures

US Dollar Index Rises Amid Geopolitical Tensions

During early trading hours in Europe on Thursday, the US Dollar Index (DXY)—which tracks the performance of the US Dollar against a group of six major global currencies—hovered close to 99.00. The index has seen a modest increase as ongoing uncertainty and heightened geopolitical risks in the Middle East influence market sentiment.

Recent developments include Israel announcing fresh attacks on targets within Iran and on what it identified as Hezbollah facilities in Beirut. In response, Iranian officials refuted claims that they had communicated with the United States during the current conflict.

Tehran has also stated that its military is preparing for a prolonged conflict rather than seeking negotiations. Concerns over an extended war are likely to prompt investors to seek refuge in safe-haven assets like the US Dollar in the short term.

On the economic front, the US service sector showed signs of acceleration in February, as the SM Services PMI climbed to 56.1 from January’s 53.8, surpassing analysts’ expectations of 53.5. This robust data could further support gains in the DXY.

Looking ahead, most market participants anticipate that the US Federal Reserve will maintain current interest rates until at least the summer, despite calls from President Donald Trump for rate reductions.