Dollar gains amid rising Iran tensions, Treasury curbing steep long-dated yields. Washington boosted its sanctions against Iran on Tuesday, and the Treasury took steps to limit gains in steep long-dated yields, helping the dollar to advance again on the day.
The dollar index firmed by some 0.1% in afternoon trade to add to the prior session’s strength, as heightened geopolitical tensions sold off the euro and pound and weakened the yen to another new low.
Investors are turning their attention to Trump’s increased sanction activities against Tehran that are adding to downward pressures on trade and energy markets, and to Treasury Secretary Scott Bessent’s efforts to dissuade the rest of the world from continued financial business with Iran.
Additionally, traders were unnerved as the Treasury Department announced its intention to continue purchasing big amounts of long-dated securities in an attempt to press yields downward despite worries about the dollar and inflation.
At the same time, crypto assets turned higher after recent losses as traders braced themselves for devaluation, while awaiting further indication from the Federal Reserve about how many and how steep further rate rises could be.
The combination of geopolitical uncertainty, fiscal concerns and expectations for interest rates is likely to keep currency markets volatile in the days ahead.
