Dollar falls as Trump pauses Iran strikes, cooling supply-shock fears

NEW YORK – The dollar fell against most major currencies on Monday after US President Donald Trump delayed striking Iran’s energy infrastructure following what he called productive talks between the two countries, easing near-term concerns about further supply shocks and slightly boosting risk assets.

Trump said he had asked the Department of Defense to postpone “any and all” military strikes against Iranian power plants and energy infrastructure for five days.

He made the announcement on Truth Social just hours before a deadline he had set for Tehran to “fully open” the Strait of Hormuz, threatening to destroy Iranian power plants in a further escalation in a conflict now in its fourth week.

Iran’s foreign ministry denied the talks shortly thereafter, adding that the country’s conditions to end the war had not changed.

“Everything seems so fleshed out that I think the market is having a hard time believing it’s complete fiction,” said Steven Englander, head of global G10 FX research and North America macro strategy at Standard Chartered in New York.

“Whether they are close to a deal as Trump laid out is a different story, but I think the market is going with the idea that there has been some sort of communication going on.”

DOLLAR FALLS AGAINST EURO, YEN AND STERLING

The dollar remained weak in afternoon trading, with the euro rising 0.4% to USD 1.1616. Earlier, it hit its highest since March 11.

The buck was 0.6% weaker against the yen at 158.30 yen, retreating slightly from the key 160 yen level that puts traders on alert for potential intervention from the Bank of Japan.

Meanwhile, sterling rose 0.71% to USD 1.3436, after hitting its highest level since March 10.

That left the dollar index, which measures the US currency against a basket of peers, down 0.4% at 99.08.

On Friday, the index had notched its first weekly decline since the start of the war, as the inflationary effects of surging oil prices prompted central banks to turn hawkish, supporting other currencies.

Global stock and energy markets also recovered sharply after Trump’s comments. Treasury yields also retreated from multi‑month highs.

A reporter for the US news outlet Axios said Turkey, Egypt, and Pakistan had met Trump’s special envoy Steve Witkoff and, separately, Iranian Foreign Minister Abbas Araghchi.

Araghchi’s ministry said there were “initiatives” to reduce tensions, the Mehr News Agency reported.

The price of the benchmark Brent blend crude oil was down around 12% at USD 98.65 a barrel, after earlier falling to USD 96.

Elias Haddad, global head of markets strategy at Brown Brothers Harriman in London, said until there is further clarity, it is too early to call peak fear or de-escalation in the Iran conflict.

“But the market is starting to sniff out the more encouraging outlook,” Haddad said. “Assuming that we still haven’t reached de-escalation, the big risk that I see is that this energy shock morphs into a fiscal shock.”

(Reporting by Laura Matthews in New York; Additional reporting by Harry Robertson in London, and Rocky Swift in Tokyo; Editing by Andrei Khalip, Aidan Lewis, Kevin Liffey, and Andrea Ricci )

Dollar set for weekly drop as central banks turn hawkish with rising oil prices

NEW YORK/LONDON – The dollar gained on Friday but was still headed for a weekly fall against major currencies as investors pared back bets on interest rate cuts from the US Federal Reserve, given the likelihood of higher inflation from rising energy prices.

Before the US-Israeli war on Iran began in late February, investors had priced in two Fed cuts this year. But they now largely believe one cut is a distant prospect, and other major central banks are turning more hawkish.

The euro, yen, sterling, and Swiss franc headed for weekly gains against the dollar as policymakers laid the groundwork for higher interest rates in response to the war in the Middle East, which has choked oil and gas supplies.

The euro was down 0.25% to USD 1.156 but on track to add 1.3% this week.

The yen was down 1% against the greenback to 159.30 per dollar. It is set to gain 0.24% this week.

Sterling weakened 0.72% to USD 1.333 but was set to gain nearly 0.84% against the dollar for the week.

“The overall picture is still that central banks sound more confident (about the impact of inflation) than people thought, especially the Bank of England and the Bank of Japan as well,” said Juan Perez, director of trading at Monex USA in Washington.

“This followed a message from the Federal Reserve on Wednesday that is tied to the idea that everyone has been thinking that there’s going to be one or two cuts for 2026, and they have no interest in cutting rates.”

Benchmark Brent crude futures are up about 50% since the US and Israel attacked Iran, which has all but closed the Strait of Hormuz and disrupted Middle East energy exports. Brent futures for May delivery settled on Friday up 3.26% to USD 112.19 a barrel, the highest since July 2022.

The dollar index was up about 0.26% at 99.59, but on track for a 0.94% weekly decline, its largest since late January. Still, many analysts think a prolonged fall is unlikely.

“Markets have preempted communication with a notable shift in policy pricing: many G10 central banks now priced for hikes, while the Fed is priced for fewer cuts in 2026. This repricing has mitigated some of the US dollar’s oil-induced rally,” said Bank of America Global Research analysts led by Adarsh Sinha.

CENTRAL BANK DECISIONS

The European Central Bank kept rates on hold on Thursday, but warned of inflation driven by energy prices.

The Bank of England also kept rates on hold, but set off a sharp rout in short-dated gilts by saying it was ready to act.

The Bank of Japan left the door open to a hike as soon as April, wrong-footing investors who had bet on a further slide in the yen and helping to lift the currency.

The Australian dollar weakened 0.99% versus the greenback to USD 0.702 for a weekly gain of 0.53%, after the Reserve Bank of Australia hiked interest rates for the second time in as many months on Tuesday and investors expected more to come.

The Fed left rates on hold as expected earlier this week, but Chair Jerome Powell said it was too soon to know the scope and duration of the economic impact from the war.

The Swiss franc was flat at 0.788 against the dollar but headed for a weekly gain of 0.43%.

(Reporting by Samuel Indyk in London and Jiaxing Li in Hong Kong. Editing by Jan Harvey, Nia Williams, and Chris Reese)

Gold falls 1.8% after report of US sending more troops to Middle East

Gold prices fell by 1.8% on Friday as the dollar strengthened on a report that the United States will deploy extra troops in the Middle East, fanning concerns of higher oil prices, inflation, and with it, elevated interest rates.

Spot gold fell 1.8% to USD 4,563.64 per ounce as of 2:14 p.m. ET (1814 GMT) after earlier rising 1%. US gold futures for April delivery were 0.7% lower at USD 4,574.90.

The dollar and US Treasury yields extended gains after a Reuters report, citing three US officials, that the US military is deploying thousands of additional marines and sailors to the Middle East.

A stronger dollar makes dollar-priced bullion less attractive to holders of other currencies.

The US-Israeli war on Iran has killed thousands, spilled across the Middle East, and hit the global economy since the two countries launched a joint attack on February 28. Iran’s prolonged blockade of the Strait of Hormuz could keep energy prices elevated and fuel inflation.

“Gold and silver are being dragged lower as markets climb the usual wall of worry ahead of the weekend,” said independent metals trader Tai Wong, adding: “Metals are especially wobbly after this week’s aggressive drawdown on rate hike fears. It should consolidate soon, but it will be a bumpy ride.”

Gold is considered a hedge against inflation and uncertainty, but higher interest rates curb the non-yielding asset’s appeal.

Major global brokerages see a higher likelihood of the European Central Bank and Bank of England raising interest rates, potentially as early as April. The Federal Reserve held interest rates steady on Wednesday and projected higher inflation, while Chair Jerome Powell said its future policy path was subject to unusually high uncertainty due to the war.

Spot silver fell 4.8% to USD 69.39. Platinum dropped 0.9% to USD 1,953.18 and palladium slipped 1.6% to USD 1,423.59. All three metals were on track for weekly declines.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Leroy Leo and Alexander Smith)

US bonds falter as raging war in Iran lifts oil, inflation outlook

NEW YORK – US Treasuries declined for a third straight session on Friday, tracking the broader selloff in UK and European government bonds, as escalating Middle East tensions kept oil prices elevated and reinforced inflation worries.

US two-year yields, which move inversely to prices and have been rising for three straight weeks, were on track for their largest three-day rise since last April. The yield, the most responsive to interest rate expectations, was last up 5.9 basis points (bps) at 3.892%.

The benchmark 10-year yield also increased, up 10.5 bps at 4.388%, on pace for its biggest one-day rise since early June 2025. Earlier in the session, it hit its lowest since July.

British and European government bonds sold off as well.

“We saw a fairly decent selloff in European bonds. And that’s just forcing a selloff as well in US Treasuries,” said Tom di Galoma, managing director of global rates trading at Mischler Financial Park City, Utah. “People are also worried that we’re getting close to the weekend and we’re going to see severe battle in the Middle East that could cause another push higher in oil.”

US crude futures were last up 3% at USD 98.32 per barrel. Since the beginning of the month, crude futures have risen 47%, the largest monthly gain since May 2020.

“The spike in energy prices is pushing inflation expectations higher, particularly in Europe, and this is causing that ripple effect across global bond markets,” said Chip Hughey, managing director of fixed income at Truist Wealth in Richmond, Virginia. “There is also a growing consensus that some central banks will potentially need to respond to an inflation shock by not only ending their rate cut cycles, but actually pivoting to rate hikes this year.”

On Friday, three US officials told Reuters that the US military is deploying a large amphibious assault ship with thousands of additional Marines and sailors to the Middle East.

That report came after Iran attacked an oil refinery in Kuwait on Friday and Israel killed a spokesman of Iran’s Revolutionary Guards.

US rate futures on Friday began to price in the possibility of an interest rate hike later this year, with markets assigning a 32% chance of tightening by November, according to LSEG estimates, up from virtually zero late on Thursday.

That shift in policy expectations fed through to the curve, which steepened for the first time in five sessions as the spread between two- and 10-year yields widened to 49.6 bps from 45.4 bps late Wednesday.

The curve showed a classic bear-steepening pattern, with long-term yields climbing more rapidly than short-term rates as investors priced in a heightened risk of reaccelerating inflation, at which point the market could anticipate a Fed rate increase to battle the rise in prices.

In other Treasury maturities, the belly of the curve sold off sharply as well. US five-year yields advanced 8.6 bps to 4.006%, while seven-year yields rose to 4.20%, up 10.6 bps.

British 10-year government borrowing costs soared to their highest level since the global financial crisis. The 10-year gilt yield was last up 14.7 bps at 4.995% after earlier hitting 5.022%, the highest since mid-2008.

Germany’s 10-year yield also hit the highest since 2011 and was last up 8.6 bps at 3.038%.

“Europe has a larger dependency on imported energy,” Truist’s Hughey said. “That makes it more vulnerable to supply shortages caused by the conflict in Iran. Meanwhile, the US is a net exporter of energy, which does provide some insulation from oil supply shortages.”

Inflation swaps, a measure of the outlook for future consumer prices, hit a six-month peak of 3.3% on Friday. This reflected expectations that the US consumer price index will average more than 3% over the next 12 months. That is in stark contrast with the latest CPI reading of 2.4% year‑on‑year in February.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrei Khalip and Will Dunham)

Investors drive US money market fund assets to records as war-related risk fears multiply

PROVIDENCE, RHODE ISLAND – As the Iran conflict intensifies, the spike in oil prices and rising inflation fears are spurring investors to ditch stocks as too risky and shun traditional safe havens such as gold in favor of money market funds.

The result: assets in those ultra-short-term and ultra-safe Treasury funds are now hovering around USD 8 trillion, according to calculations from providers such as the Investment Company Institute, JPMorgan Chase, and Crane Data, which specializes in tracking money market flows. While their methodology varies and precise calculations range from USD 7.8 trillion to USD 8.1 trillion, the sources agree that assets have hit a record amid the conflict.

“When you have times of dislocation and times of fear, cash is the only thing that makes sense to a lot of people, because there’s the belief that you ‘can’t lose’ by holding it,” said Malcolm Polley, director of strategic market analysis with Stratos Investment Management, a wealth management firm. He added that he is reassuring some of his clients that “the world is not coming to an end just yet.”

“This is the ‘wait-and-see’ money coming from investors who are wary about what’s happening right now,” said Sweta Singh, founding partner at money management firm City Different Investments.

The latest catalyst for the steady flow of assets into money market funds is the impact of soaring crude oil prices on the economy and inflation. Brent crude futures rose 1.2% on Thursday to USD 108.65 a barrel, after trading as much as 10% higher during the day.

“Gold, silver, and currencies are increasingly being driven by oil prices,” said Steven Wieting, co-founder of CIO Group, a wealth management firm. “As all risk assets take on this uncertain path, dependent on oil, it is natural for cash to build on the sidelines.”

The longer prices linger at lofty levels, the greater toll they will take on everything from consumer spending to corporate earnings, market strategists are cautioning investors.

“There are few places to hide from this near-term supply shock,” analysts at the BlackRock BLK.N Investment Institute wrote in a client note published on Monday. “Government bonds and gold are not providing ballast as equities fall.” Treasuries are no safe haven either, given the potential for inflation to climb further and already-high government debt to rise as the cost of conducting the war mounts.

“The elephant in the room is stagflation,” said Jacob Taurel, managing partner at Activest Wealth Management, adding that he believes this combination of inflation and stagnant or negative growth is “a real risk.”

To some, that offers a great case for putting money to one side in a product that currently offers yields north of 3% and, in a handful of cases, approaching 4%, depending on the financial institution. In the first few days of the Iran war, Deborah Cunningham, chief investment officer of global liquidity markets at Federated Hermes, said in an analysis published earlier this month that the “collective negative vibe often sends investors to safer harbors,” a category she told Reuters includes money market funds.

Cunningham told Reuters she pegs the size of that cash mountain in money markets at USD 8.3 trillion.

Financial advisors, however, are cautioning their clients about being carried away by their risk aversion and putting too much money into money market funds.

“The problem with going to cash is that you have to make two separate decisions correctly: when to get into cash and when to move back into other assets,” said Polley.

“When people are scared, they can be irrational.”

(Reporting by Suzanne McGee in Providence, Rhode Island; Editing by Stephen Coates)

Oil rally puts energy fund inflows on pace for 12-year high

Investors have added to energy-sector funds at the fastest clip in more than a decade, as an oil-price surge prompted by the Iran war is set to deliver windfall profits for oil producers and refiners.

According to LSEG Lipper, global equity funds focused on the energy sector have attracted inflows of USD 2.1 billion so far this month and are on track to surpass the 12-year high of USD 2.2 billion recorded in June 2014.

As rising oil prices pressure most sectors, investors are piling into energy stocks, which stand out as one of the few beneficiaries.

Supported by higher oil prices, the total market capitalization of the top 25 global oil firms has risen about 20% so far this year to USD 5.3 trillion. The MSCI World Energy index has gained about 29.5% over the same period, outperforming the broader MSCI World index, which has fallen 1%.

Flow data showed inflows into energy funds picked up from the start of the year, reversing outflows seen last year, supported by attractive valuations, with persistent inflation and resilient global growth keeping oil demand and prices elevated.

“The boom in energy stocks started as a value play and evolved into a geopolitical risk trade,” said David Russell, global head of market strategy at TradeStation Group.

“The main beneficiaries are production companies, which drill for oil, and refiners, which profit from wider crack spreads as global supply tightens.”

So far this month, Xtrackers MSCI World Energy UCITS ETF has attracted USD 318.8 million, while BGF World Energy Fund A2 USD LP60056151 and iShares S&P 500 Energy Sector UCITS ETF USD (Acc) received USD 315.8 million and USD 241.3 million, respectively, according to the data.

Some analysts said investors are increasingly using energy stocks as a hedge against rising oil prices, but cautioned that any signs of de-escalation, such as a ceasefire or reopening of the Strait of Hormuz, could trigger a rapid reversal in flows.

Grant Meyer, founder and financial adviser at TruMix Advisors, said inflows into energy sector funds could continue in the near term.

“Part of what people forget is that shutting down oil production isn’t like flipping a light switch,” he said.

“Countries without sufficient storage capacity will take time to ramp back up even after a resolution, keeping supply tight for longer than headlines suggest.”

(Reporting By Patturaja Murugaboopathy, with additional reporting by Gaurav Dogra in Bengaluru; editing by Colin Barr and Krishna Chandra Eluri)

Dollar gains as Fed leaves rates unchanged

NEW YORK – The US dollar strengthened against other major currencies on Wednesday, on track to claw back losses from the past two sessions after the US Federal Reserve left interest rates unchanged.

The Fed projected higher inflation as well as one interest rate cut for the year as officials weighed the economic impact of the US and Israeli war on Iran.

The dollar has strengthened overall since the Middle East conflict almost three weeks ago, reaching a 10-month high late last week as the conflict and rising oil prices drove investors into safe-haven US assets.

“The consistent tone, paired with a fresh set of projections showing lower growth, weaker employment, and higher inflation than in December, marks the clearest signal yet that Chair Jay Powell’s Fed sees higher energy prices playing a temporary, but demand-destructive role in the US economy,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

The dollar strengthened 0.92% to 0.792 against the Swiss franc. The euro was down 0.5% at USD 1.148.

The Fed didn’t change expectations of where rates will be heading or that Treasury markets are headed in the wrong direction, which is positive for the dollar, said Joseph Trevisani, senior analyst at FX Street in New York.

“It’s a hawkish hold and the main reason for that is because the base case going forward was still one rate decrease in 2026 and although that hasn’t changed, treasury rates are higher than they were two or three months ago,” Trevisani said.

The dollar index was up 0.51% to 100.0.

In his press remarks following the Fed decision, Chair Jerome Powell said the central bank will look through the impact of higher oil prices induced by the conflict if there’s more progress this year in bringing down core inflation driven by goods prices.

Prior to the Fed’s decision, data from the US Labor Department showed that the Producer Price Index surged 0.7%, while economists polled by Reuters had forecast a 3% rise.

YEN INCHES TOWARD INTERVENTION ZONE

Other major central banks are poised to announce their rate decisions this week, including the European Central Bank, Bank of England and Bank of Japan.

They are all widely expected to maintain interest rates but traders will look for clues on where borrowing costs are heading amid a potential inflationary shock from the Middle East war.

The Japanese yen weakened 0.43% against the greenback to 159.7 per dollar. The yen is trading near its 2024 intervention zone, triggering worries that Japanese authorities might step in again.

Sterling was down 0.46% at USD 1.3292.

The dollar strengthened 0.19% to 6.894 versus the offshore Chinese yuan.

(Reporting by Chibuike Oguh in New York; Additional reporting by Saqib Ahmed in New York; Editing by Emelia Sithole-Matarise, Chris Reese, and Nick Zieminski)

US yields rise as Fed keeps rates steady, emphasizes resilient growth

NEW YORK – US Treasury yields advanced on Wednesday after the Federal Reserve kept interest rates unchanged, as widely expected, while maintaining its forecast for a single rate reduction in 2026.

The Fed also upgraded growth projections for this year and next, with Chair Jerome Powell noting in comments after the Fed decision that the US economy has remained resilient through a number of challenges. He added that generative artificial intelligence tools were certain to contribute to productivity gains for years to come.

Officials discussed the chance “our next move might be an increase” but “the vast majority of participants don’t see that as their base case,” Powell said at a press conference. But he added: “We don’t take things off the table.”

US two-year yields, which reflect interest rate expectations, were last up 9.1 basis points (bps) at 3.762%.

The benchmark 10-year yield rose 5.9 bps to 4.261%.

US 30-year yields were up 2.6 bps at 4.878%.

“Implications of developments in the Middle East for the US economy are uncertain,” the Fed said in a policy statement that also noted ongoing stable unemployment. It kept the policy rate in the 3.50%-3.75% range.

The US-Israeli war on Iran is in its third week and the Strait of Hormuz, through which about 20% of global oil and liquefied natural gas flows, remains largely closed off.

New projections from US central bank policymakers showed that the Fed’s benchmark overnight interest rate would fall by just a quarter of a percentage point by the end of this year, with no hint of the timing of such a move. That view was unchanged from previous projections.

“The big takeaway is that the uncertainty is still so high in terms of what’s going to happen with the war, what’s going to happen with the job market, what’s going to happen on inflation that it’s really hard to get a strong view about where the Fed is heading,” said Tony Rodriguez, head of fixed income strategy at Nuveen.

The new rate and economic forecasts showed the Fed, for the time being, largely looked through the oil shock, with policymakers still expecting to cut rates this year and anticipating inflation to be 2.2% by the end of 2027, near the central bank’s 2% target.

GROWTH AND INFLATION PROJECTIONS

Economic growth was raised slightly to 2.4% for 2026 versus 2.3% in December, and the projected unemployment rate was unchanged at 4.4%.

Inflation, as measured by the personal consumption expenditures price index, is now seen at 2.7% by year-end, based on the median policymaker view. In December it had been pegged at 2.4%.

Core PCE inflation, which strips out volatile oil and food prices, is now also seen rising to 2.7%, compared with 2.5% previously.

“The growth numbers are the more kind of surprising element increasing in 2026 by one-tenth and 2027 by three tenths,” Rodriguez said.

“So that to me implies that you get energy prices kind of almost resetting, maybe not back to below USD 60 per barrel, but certainly back to USD 65, a level that really wouldn’t impact growth very much and inflation will pass through relatively quickly.”

Post-Fed, US rate futures pared back easing bets for 2026, now showing just 20 bps of rate cuts this year, versus 26 bps late on Tuesday, according to LSEG data. The next rate cut is not likely until December or January next year.

Following the Fed statement, the yield curve steepened a touch, with the spread between two-year and 10-year yields at 51.4 bps. It was at 50.8 bps just before.

Earlier in the session, the curve narrowed to 48.8 bps from 52 bps late on Tuesday. Wednesday’s curve was the flattest since late November.

The curve showed a bear-flattening pattern, with short-term interest rates rising faster than long-dated ones. This scenario likely reflects expectations that the Fed could continue the pause of its rate-cutting cycle as it looks to tamp down rising inflation.

Earlier in the session, data showed stronger-than-expected producer price data for the month of February, which kicked off the rise in Treasury yields.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama, Nia Williams, and Edmund Klamann)

Oil prices drop as US crude inventories show an increase

BEIJING – Oil prices fell slightly on Wednesday morning after sources citing American Petroleum Institute figures showed an increase in US crude inventories.

Brent futures dropped USD 1.15, or 1.11%, to USD 102.27 a barrel by 0108 GMT, while US West Texas Intermediate crude dropped USD 1.54, or 1.6%, to USD 94.67.

US crude stocks rose by 6.56 million barrels in the week ended March 13, market sources said, citing API figures on Tuesday.

A Reuters poll showed that US crude oil stockpiles were expected to have risen by about 380,000 barrels in the week to March 13.

In terms of supply, Iraq’s oil minister said on Tuesday that the Iraqi government and the Kurdistan Regional Government reached an agreement to resume oil exports to Turkey’s Ceyhan energy hub starting on Wednesday.

Oil flow from Ceyhan port is expected to start at 10 a.m. local time (0700 GMT) on Wednesday.

Libya’s National Oil Corporation said early on Wednesday that flows from the Sharara oilfield were gradually redirected through alternative pipelines after a fire broke out, adding that production remains on tap and there were no casualties.

Iran’s security chief Ali Larijani was killed by Israel, Tehran confirmed on Tuesday, the most senior figure targeted since the US-Israeli war’s first day, while a senior Iranian official said Iran’s new supreme leader rejected de-escalation offers conveyed by intermediary countries.

The United States military said Tuesday it had targeted sites along Iran’s coastline near the Strait of Hormuz because Iranian anti-ship missiles posed a risk to international shipping there.

Iranian power broker Larijani’s death and the US military’s strikes on Iranian coastal positions near the Strait of Hormuz have raised hopes that the conflict could end sooner, said Mingyu Gao, chief researcher for energy and chemicals at China Futures.

(Reporting by Sam Li and Lewis Jackson; Editing by Stephen Coates)

Dollar holds losses as risk appetite flickers ahead of central bank meetings

TOKYO – The dollar held losses on Wednesday as a glimmer of risk appetite came back to markets ahead of a slate of key central bank decisions.

The yen rallied from levels that conjured concerns of intervention in markets by Tokyo ahead of Japanese Prime Minister Sanae Takaichi’s meeting in Washington with President Donald Trump. The euro was stable after two days of gains ahead of the European Central Bank’s meeting later in the day.

The greenback has gained as the only remaining haven currency during the Middle East crisis that is now in its third week. Overnight, Tehran confirmed Iran’s security chief Ali Larijani was killed by Israel, the most senior figure targeted since the US-Israeli war’s first day.

“Volatility has settled largely due to relatively benign price action in energy markets overnight. But the risks haven’t diminished at all,” said Kyle Rodda, a senior analyst at capital.com. “If anything, it could cause a rapid risk-on move in the markets, it’s the US seemingly wresting control of the Strait from the Iranians.”

The dollar index, which measures the greenback against a basket of currencies, traded at 99.56 after a two-day decline. The euro was little changed at USD 1.1538.

The yen strengthened 0.06% to 158.91 per dollar. Sterling held steady to USD 1.3353.

The dollar reached a 10-month high at the end of last week as the Middle East conflict and rising oil prices prompted investors to seek safety in US assets.

In a sign of how the crisis is upending diplomacy and trade, Trump on Tuesday said he was postponing a highly anticipated trip to Beijing to meet with Chinese President Xi Jinping. Trump had been set to travel to Beijing from March 31 to April 2 for the first trip there of his 14-month-old second term.

Japanese PM Takaichi is due to depart for her meeting with Trump on Wednesday evening.

The US Federal Reserve will announce its policy decision on Wednesday, with the ECB, the Bank of England, and the Bank of Japan following a day later. They are all expected to keep rates unchanged, although traders will be looking out for commentary about inflation and economic outlook amid the US-Israeli war with Iran.

Expectations for Federal Reserve easing have also been scaled back, with markets now assigning about 25 basis points of cuts this year. Traders are pricing in almost two European Central Bank rate hikes in 2026, a sharp shift from the roughly 50% chance of a cut seen before the conflict began.

The Australian dollar strengthened 0.06% versus the greenback to USD 0.7106. New Zealand’s kiwi weakened 0.02% to USD 0.5856.

In cryptocurrencies, bitcoin fell 0.48% to USD 74,193.50 and ether declined 0.04% to USD 2,327.66.

(Reporting by Rocky Swift; Editing by Sam Holmes)

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