DXY Climbs Above 99.50 as Risk Aversion Rises Amid US-Iran Tensions

The US Dollar Index (DXY) is gaining ground after registering modest losses in the previous day, trading around 99.70 during the Asian hours on Monday.

The Greenback receives support from broad risk aversion amid geopolitical tensions remaining high as the ongoing United States (US)-Iran conflict enters a critical diplomatic phase.

Weaker-than-expected US employment data has dampened expectations for a near-term Federal Reserve (Fed) rate hike, with Nonfarm Payrolls (NFP) unexpectedly dropping by 23,000 in July and sharp downward revisions to 20,000 from the previous 57,000 in June.

CME FedWatch Tool suggests that markets now see around a 46% probability of a 25 basis point rate hike in September, down from 67% a week earlier, while investors are focused on upcoming inflation reports for further clues on monetary policy.