US Dollar Index holds above 99.00 as US-Iran talks stir uncertainty

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends its gains for the second consecutive day, trading around 99.30 during the Asian hours on Wednesday.

However, the Greenback struggled amid reports that Washington is pursuing talks with Iran to de-escalate the conflict. US President Donald Trump said Iran had offered a goodwill gesture in negotiations tied to energy flows through the Strait of Hormuz. Moreover, Israeli media indicated the US was seeking a one-month ceasefire to facilitate discussions, while The New York Times reported that Washington had presented Iran with a 15-point proposal to resolve the conflict.

Despite these developments, traders remained cautious as Iran rejected US claims of diplomatic progress. While officials denied any formal breakthrough, a senior Iranian source confirmed that messages had been exchanged via Pakistan, which has emerged as a key mediator. Reports also suggest that an in-person meeting could take place in the coming days.

Meanwhile, Chicago Fed President Austan Goolsbee warned that energy shocks could pose risks to both sides of the Federal Reserve’s mandate. He noted that the outlook for rate cuts remains uncertain and will depend on the duration of the conflict and further progress on inflation.

Additionally, Fed Governor Michael Barr said the central bank may need to keep interest rates steady for some time before considering further cuts, citing persistent inflation above the Fed’s 2% target and risks stemming from the ongoing Middle East conflict.