US Dollar Strengthens on Inflation Data and Risk Aversion

The US Dollar gained broad support, driven by a combination of hotter-than-expected US Producer Price Index (PPI) data and rising geopolitical tensions. The US Dollar Index (DXY) advanced as the greenback strengthened against multiple currencies, including the Japanese Yen, Australian Dollar, and Swiss Franc. This move was further bolstered by safe-haven demand amid renewed uncertainty in the Middle East.

Middle East Tensions Influence Market Sentiment

Geopolitical friction increased after US forces intercepted Iranian drones aimed at commercial ships near the Strait of Hormuz. This development contributed to risk-off sentiment, supporting the US Dollar and putting downward pressure on silver prices, which retreated from recent gains. Conflicting reports of a potential Iran deal and ceasefire prospects, however, helped to stabilize crude oil prices after a sharp decline.

Divergent Global Central Bank Policies Impact Currencies

Central banks outside the United States signaled varying monetary policy directions, influencing foreign exchange markets. The European Central Bank (ECB) implemented an interest rate hike, which provided a lift to the Euro. Meanwhile, the Bank of Japan is expected to proceed with its policy meeting despite the hospitalization of its governor, and the People's Bank of China (PBOC) guided the yuan stronger with its daily fixing.