ArmInfo. The US dollar is confidently strengthening against major global currencies amid the ongoing escalation of the Middle East conflict.
The ICE DXY index, which tracks the dollar against six currencies (the euro, Swiss franc, yen, Canadian dollar, British pound, and Swedish krona), is up 0.27%, while the broader WSJ Dollar Index is up 0.43%.
The DXY has risen to its highest in more than three months amid soaring oil prices. Experts are adjusting their interest rate forecasts for leading global central banks, fearing rising inflation. Traders are confident that the Federal Reserve will not change its base rate at its March meeting and are pricing in the next rate cut in September instead of July, according to Trading Economics.
"The dollar is the main beneficiary in the current environment, given its safe-haven status and the US's position as a net energy exporter," notes Carol Kong, an analyst at Commonwealth Bank of Australia in Sydney. "The extent of further dollar appreciation depends on the depth and duration of the Middle East conflict, which remains highly uncertain."
Isabel Schnabel, a member of the Executive Board of the European Central Bank, stated that geopolitical tensions pose a risk of higher inflation, requiring the regulator to remain vigilant. "The surge in energy prices as a result of military action makes the inflation outlook more uncertain," she noted at an event in New York.
