US Dollar Index steadies near 98.00 as US-Iran optimism weakens safe-haven demand.

The US Dollar Index softens as optimism surrounding a potential US-Iran agreement dampens safe-haven demand. Lower oil prices are also easing inflation worries, reducing expectations that the Fed will maintain a hawkish stance for longer. Meanwhile, Fed official Austan Goolsbee cautioned that inflation has picked up since the conflict began, moving further away from the central bank’s 2% target.

The US Dollar Index (DXY), which tracks the Greenback against six major currencies, is stabilizing around 98.00 during Thursday’s Asian session after declining nearly 0.5% in the previous trading day.

The US Dollar remains under pressure as optimism over a possible US-Iran agreement reduces safe-haven demand. The prospect of easing tensions has driven oil prices sharply lower, helping to ease inflation concerns and diminishing expectations that the Federal Reserve will maintain a hawkish policy stance for an extended period.

Still, Chicago Fed President Austan Goolsbee warned that inflation has failed to continue moderating toward the Fed’s 2% target and has instead accelerated since the conflict started.

According to the BBC, Iran said on Wednesday that a US proposal aimed at ending the conflict is “still being considered,” despite growing speculation that both sides could be approaching a deal. Reports suggest Washington submitted a one-page memorandum of understanding that would gradually reopen the Strait of Hormuz and ease the US blockade on Iranian ports, while discussions on Tehran’s nuclear program would take place later. However, no final agreement has yet been reached.

Meanwhile, Donald Trump told CNBC that Iran would face bombing “at a much higher level” if it refuses to accept a peace deal. In a post on Truth Social, Trump added that the US military operation known as “Operation Epic Fury” would end if Iran “agrees to give what has been agreed to.”