Dollar holds firm before Trump's Iran deadline

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The dollar stood shy of recent highs on Tuesday as traders counted down to a U.S.-imposed deadline for Iran to open the Persian Gulf to shipping.

Witthaya Prasongsin | Moment | Getty Images

The U.S. dollar traded close to its highest levels in almost 11 months on Tuesday as investors took pause ahead of a U.S.-imposed deadline for ​Iran to reopen the Strait of ​Hormuz to shipping or face ​attacks on its infrastructure. The war in the Middle East and the closure of the Gulf chokepoint have sent energy prices soaring and driven investors to dollars as the most effective safe haven, pushing the greenback higher.

Iran showed no sign of agreeing ⁠to ‌U.S. President Donald Trump’s demand that it open the strait before ⁠his 8 p.m. Eastern Time deadline.

“No one knows whether the deadline is another bout of maximalist pressure from the White House, but until there is news of a ceasefire, or perhaps a prolonged postponement of the current deadline, the dollar is likely to stay bid,” said ‌Chris Turner, head of forex research at ING.

Brent crude futures hovered around $110 a barrel as Iran’s rejection of the U.S. ceasefire proposal kept tensions elevated.

“The Iranian leadership has demonstrated, surprisingly to many it ​seems, that it can exercise full control over the strait,” said Thu Lan Nguyen, head of forex and commodity research at Commerzbank.

“And it is already becoming apparent that Iran intends to utilize this control for its long-term interests,” she added.

The U.S. dollar index stood at 99.912, near the 100.64 mark reached last week, ⁠its highest since May 2025.

The yen slipped to 159.845 to the dollar, not far from multi-decade lows and levels that drew ‌intervention in 2024.

Investors will also closely watch U.S. economic ‌data for clues on the Federal Reserve’s policy path, with solid readings likely to prompt investors to price in no change to current monetary policy if energy prices rise again.

“Markets are beginning to focus on the risks to growth, as much as to inflation, from demand ⁠destruction,” said Bob Savage, global head of market strategy at BNY.

The latest Personal Consumption Expenditures price index inflation ⁠data for February is due on Thursday.

The minutes from the Fed’s Federal Open Market Committee meeting in March will be released on Wednesday and are expected to provide indications on the ​policy outlook.

The euro was last ‌up at $1.1569, while traders priced in three European Central Bank rate hikes by year-end and ECB officials reiterated the central bank might act to tame inflation. The ECB’s Dimitar Radev, a member of the European Central Bank’s Governing Council, said the central bank must be ready to raise rates swiftly if signs of persistent price pressures emerged, and Belgian central bank chief Pierre Wunsch said a move later this month can’t be ruled out.

The Australian ​and New Zealand dollars, which tumbled as Iranian strikes on Middle East energy infrastructure intensified late in March, were trading at $0.694 and $0.57 against the U.S. dollar, respectively.

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