According to ING’s Chris Turner, it is premature to expect a sustained sell-off in the US Dollar as ongoing Middle East tensions continue to elevate energy prices and bolster safe-haven demand [1]. The US Dollar Index (DXY) is expected to remain supported within the 99.00-100.00 range this week, reflecting the current geopolitical uncertainty and the Federal Reserve's cautious approach [1]. Reports indicate that risk assets are rebounding in Europe following news that the US has submitted a 15-point peace plan to Iran, with potential ceasefire talks possibly commencing in Islamabad on Thursday [1]. However, Turner notes that Iran maintains significant economic leverage due to high energy prices, and the continued closure of the Strait of Hormuz is already leading to fuel rationing in some countries, amplifying the global economic impact [1].
The US money market curve has now priced out any Federal Reserve easing for 2026, and recent statements from Fed officials emphasize patience, with inflation still above target and no clear path toward the Fed's 2% CPI goal [1]. As a result, the easing cycle is temporarily suspended, and Turner suggests that the market could even begin to price in potential Fed hikes if the US jobs market remains resilient [1]. Investors are reportedly overweight equities, particularly in Europe and emerging markets, and are positioned for a swift resolution to the conflict, though Turner cautions that it is too early to expect a significant drop in energy prices or a much softer dollar this week [1].
CONCLUSION
The US Dollar is expected to remain stable within the 99.00-100.00 range, supported by persistent Middle East tensions and the Federal Reserve's hawkish stance. Elevated energy prices and ongoing geopolitical uncertainty are keeping safe-haven demand strong, with no immediate signs of a major dollar decline or Fed easing. Investors remain optimistic for a quick resolution, but market conditions suggest caution in the near term.