The US dollar edged higher on Thursday, after hitting its highest level since early April, amid growing doubts about the possibility of a deal to reopen the Strait of Hormuz and as markets shifted their focus to the prospect of a US interest rate hike. The move came as tensions in the region remained high after Iran's Revolutionary Guard targeted a US airbase, following President Donald Trump's dismissal of a report suggesting an agreement with Tehran was imminent.
The dollar index rose 0.11% to 99.33 after reaching 99.546 in Asian trading, its highest level since April 7. Oil prices also climbed more than 2% after a sharp drop in the previous session, while the Japanese yen remained relatively stable at 159.48 against the dollar.
Investors are awaiting the Federal Reserve's preferred US inflation data, the core personal consumption expenditures (PCE) price index, which could reinforce bets on a tightening of monetary policy. Analysts said that the hawkish rhetoric from Fed officials in recent weeks has shifted market expectations toward a potential rate hike, while warning that the euro may struggle to remain above the $1.1650-$1.1660 range. The Australian dollar fell 0.3% to $0.7120, while the New Zealand dollar dropped 0.4% to $0.5876, after its strong gains in the previous session.
