Dollar Strengthens, US-Iran Talks Fail to Maintain Risk-Off Sentiment
The US dollar index strengthened on Monday (April 27), briefly rising to 99.3 before weakening to around 98.5, as efforts to resume peace negotiations between the United States and Iran failed. Geopolitical uncertainty kept the market cautious and supported demand for the dollar as a safe-haven asset.
The main trigger came from President Donald Trump's decision to cancel plans to send a senior envoy for the second round of talks with Iran. Tehran subsequently reiterated its position that it would not negotiate under threat or under blockade, thus deeming the diplomatic path to be unstable.
In energy markets, oil prices strengthened again as the Middle East conflict entered its ninth week and the Strait of Hormuz was deemed to remain effectively closed. The rise in oil prices heightened inflation concerns and reinforced the view that central banks could keep interest rates higher for longer, or even tighten further if price pressures escalate.
Market participants' focus now shifts to this week's central bank agenda. The Federal Reserve is widely expected to hold interest rates on hold on Wednesday, with the meeting potentially being Jerome Powell's final session as chairman before Kevin Warsh is expected to take over in May. Markets will be looking for policy implications regarding the risk of energy inflation and its impact on the growth outlook.
In addition to the Fed, investors are also preparing for policy decisions from the ECB, the Bank of England, and the Bank of Japan. This series of meetings is considered crucial because it will reshape interest rate differential expectations, which in turn influence the direction of the dollar and global risk sentiment.
Looking ahead, as long as US-Iran talks remain unresolved and energy risks remain high, oil is likely to remain volatile, with a bias supported by the supply premium. The dollar has the potential to remain strong if risk-off persists and central banks maintain a tighter stance due to energy inflation. Meanwhile, gold will move in a tug-of-war: supported by geopolitical uncertainty, but could be restrained if the dollar and expectations of higher-for-longer interest rates remain dominant. (asd)*
Source: Newsmaker.id
