United States Dollar Index holds losses after pulling back from 11-week highs

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, pulled back after reaching an 11-week high of 100.57 in the previous day and is now trading around 100.30 during the Asian hours on Thursday.

The Greenback slips on easing safe-haven demand following the BBC report late Wednesday, indicating that the White House confirmed that US President Donald Trump and Iranian President Masoud Pezeshkian signed a preliminary memorandum of understanding designed to end the US-Israel war on Iran. This decisive executive action follows the electronic signing of the initial framework by U.S. Vice President JD Vance and Iranian Parliamentary Speaker Mohammad Bagher Ghalibaf earlier in the week.

However, the US Dollar could rebound on rising odds of rate hikes by the Federal Reserve (Fed) later this year. The Fed’s June Summary of Economic Projections showed half of FOMC members expect at least one rate hike this year. Despite economic disruptions linked to the conflict in Iran, resilient labor market data and persistent underlying inflation measures continue to drive tightening pressures.

The Federal Open Market Committee (FOMC) voted unanimously to maintain its benchmark federal funds rate in the range of 3.5% to 3.75%. In his first meeting since taking the helm of the US central bank, the newly appointed Federal Reserve Chairman, Kevin Warsh, vowed to aggressively restore price stability.