The US Dollar Index remains under pressure near the 101.00 mark despite rising risk aversion in global markets.

The US Dollar Index (DXY) remains under pressure as investors weigh renewed inflation worries against signs of slowing economic momentum in the United States. Ambiguous signals from Federal Reserve Chair Kevin Warsh have added uncertainty to the Dollar’s longer-term trajectory, while ongoing geopolitical tensions in the Middle East continue to support safe-haven flows, potentially limiting further downside for the Greenback.

The US Dollar Index (DXY), which tracks the US Dollar against a basket of six major currencies, extended its decline for a second straight session, hovering near 101.00 during Thursday’s Asian trading hours.

The Greenback remains under pressure as investors assess the impact of rising inflation risks, fueled by higher energy prices, alongside signs of a slowing US economy. Although the Federal Reserve is widely expected to keep interest rates unchanged at its next policy meeting, evolving rate expectations and mixed signals from newly appointed Fed Chair Kevin Warsh have increased uncertainty surrounding the Dollar’s longer-term direction.

Nevertheless, losses in the US Dollar may be limited by persistent safe-haven demand amid escalating geopolitical tensions in the Middle East. Market concerns intensified after US President Donald Trump warned of potential strikes on Iranian infrastructure if Tehran targets vessels passing through the Strait of Hormuz, prompting Iran to threaten rapid retaliation against US-associated energy facilities in the region.

Further adding to the uncertainty, Iran-backed Houthi forces reportedly carried out missile and drone attacks on two Saudi oil tankers in the Red Sea. The incident represents the first direct assault on tankers in the strategic waterway, threatening a key alternative route for Saudi crude exports and raising fears of a broader regional conflict.