Dollar Index Rises on Inflation Expectations Despite Crude Price Drop
The dollar index DXY rose by 0.05% today due to increased inflation expectations caused by rising crude oil prices.
WTI crude oil prices surged over 2% to a one-week high, which may prompt the Fed to tighten monetary policy and support the dollar.
However, the dollar's gains were short-lived as Pakistan announced that the US and Iran are close to an arrangement to reopen the Strait of Hormuz, causing crude prices to erase most of their overnight gains.
The risk of a renewed flare-up in the Middle East remains high, providing safe-haven demand for the dollar.