Dollar Index Holds, Israel-Lebanon Ceasefire Remains Fragile
The US dollar index (DXY) moved flat around 98.25 during the Asian session on Friday (April 17), amid uncertainty regarding the Israel-Lebanon ceasefire. The market is awaiting new catalysts, with attention focused on the prospect of further US-Iran talks, which are said to take place later this week.
A 10-day ceasefire between Israel and Lebanon went into effect on Thursday, but uncertainty remains high. The Lebanese military on Friday claimed Israeli ceasefire violations, including sporadic gunfire affecting several villages in southern Lebanon, a situation that has maintained demand for safe-haven assets like the US dollar.
Meanwhile, optimism regarding the US-Iran ceasefire has the potential to curb the greenback's strength. The two-week peace deal between the two sides is currently said to be still in effect but will expire next week, while US President Donald Trump has stated that the next meeting between Washington and Tehran could take place over the weekend.
OCBC Forex strategist Sim Moh Siong believes the market is in a consolidation phase because some optimism about a ceasefire extension was already priced in earlier this week. He believes the market needs another trigger to drive a more directional movement, preventing the dollar from moving in a "one-way" direction from this point.
Beyond geopolitics, market participants are awaiting clues on how Federal Reserve officials will respond to the inflationary pressures triggered by the war. According to Fed funds futures quoted by Reuters, the market is still betting the US central bank will hold interest rates this year, so the DXY's next direction will be sensitive to developments in energy risks, geopolitical headlines, and changes in Fed policy expectations. (asd)
Source: Newsmaker.id
