The US Dollar Index remains supported above the 99.00 level as growing expectations of a more hawkish stance from the Federal Reserve continue to boost the greenback.

• The US Dollar Index remains supported by growing expectations that the US Federal Reserve will maintain a more hawkish policy stance.
• Meanwhile, the benchmark 10-year US Treasury yield briefly surged to 4.659% — its highest level since February 2025 — before pulling back to around 4.591%.
• Geopolitical tensions also eased temporarily after President Trump postponed a planned military strike on Iran following requests from Gulf states.

The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, edged higher during Tuesday’s Asian session, recovering after posting mild losses in the previous trading day and hovering near the 99.10 mark.

The Greenback found support from growing expectations that the US Federal Reserve (Fed) could maintain a more hawkish monetary policy stance. Overnight, the benchmark 10-year US Treasury yield climbed to 4.659% — its highest level since February 2025 — before easing back to around 4.591%. The spike in yields reflected investor concerns that persistently high energy prices may feed into consumer inflation, potentially forcing the Fed to keep interest rates elevated for longer.

Investors are also paying close attention to developments within the US central bank. According to Reuters, DRW Trading market strategist Lou Brien said recent market volatility has been driven by investors assessing how newly appointed Fed Chair Kevin Warsh will respond to inflationary pressures. Brien noted that markets are looking for reassurance that Warsh will uphold the Fed’s traditional policy mandate and remain independent from political influence coming from the White House.

Despite the Dollar’s strength, improving market sentiment limited safe-haven demand for the currency. Sentiment improved after US President Donald Trump announced a delay to a planned military strike on Iran. Reports indicated that Trump suspended the scheduled Tuesday attack after Persian Gulf allies urged Washington to allow more time for diplomatic negotiations. While the US administration stated it remains ready to act militarily if talks fail, officials have not provided a specific deadline for any potential action.