The US Dollar Index (DXY) has remained supported in the 98.00–99.00 range, bolstered by a surge in Brent crude oil prices to around US$120 per barrel and a rise in US Treasury yields, according to MUFG’s Lloyd Chan [1]. The increase in oil prices followed reports that President Trump rejected Iran’s proposal to reopen the Strait of Hormuz, which has contributed to the dollar's strength [1].
US Treasury yields have also played a significant role, with the 2-year yield climbing approximately 11 basis points to 3.95% and the 10-year yield rising about 8 basis points to 4.43% [1]. This rise in yields has reinforced the carry appeal of the dollar, further underpinning its strength [1].
Federal Reserve communications have contributed to a hawkish repricing of US rates. While the Fed left policy rates unchanged as expected, dissent from three committee members against signaling an easing bias in the policy statement highlights growing concerns over inflation risks [1].
Market participants are closely watching the upcoming US PCE inflation data, with expectations for March PCE inflation to rise to around 3.5% year-over-year from 2.8% previously [1]. Additionally, US gasoline prices have surged to approximately US$4.84 per gallon from pre-conflict levels near US$3.50, adding to near-term inflation pressures [1]. These factors are likely to keep the dollar firm in the near term, with the risk skewed toward further hawkish repricing of US rates [1].
CONCLUSION
The US dollar remains supported by higher oil prices and rising Treasury yields, with market attention focused on upcoming PCE inflation data. Persistent inflation pressures and hawkish Fed signals suggest continued dollar strength in the near term.