Dollar Weighed Down by Iran Sanctions and Treasury Buybacks

The US dollar has been fragile as investors weigh the impact of expanded sanctions against Iran and the Treasury's plans to buy back longer-dated bonds. The currency held steady on Tuesday, but remains at risk of further declines due to a confluence of factors.

US Treasury Secretary Scott Bessent's statement that the Treasury would double the size of quarterly repurchases of longer-dated bonds unnerved investors and sparked concerns about a shift to a more interventionist strategy. This move is seen as an attempt by the administration to curb the rise in borrowing costs ahead of mid-term elections later this year.

David Morrison, a senior market analyst at Trade Nation, believes that President Trump wants borrowing costs down and sees the Treasury's actions as a way to push yields at the longer end down. A softer dollar would also work in favor of the administration that wants more US companies to export.