USD Index Extends Gains Amid Geopolitical Risks, US Treasury Bond Buybacks

The US Dollar Index (DXY) is extending its gains for the second day in a row, trading near 99.00 during Asian hours on Tuesday.

This upswing comes as the Greenback gains safe-haven support due to escalating geopolitical tensions, including the expansion of US secondary sanctions against entities trading with Iran.

US Treasury Secretary Scott Bessent warned that a major financial institution could face enforcement action this week and clarified that Chinese entities will not be exempt from these measures.

Despite this, further gains for the Greenback may be limited by the US Treasury's decision to double its buyback operations for longer-dated bonds. Secretary Bessent plans to utilize up to $1 trillion from the Treasury General Account to finance these repurchases, which could alter market liquidity and yields.