The U.S. dollar climbed for a fourth straight session on Wednesday. It stayed close to a one-week high after President Donald Trump said an interim agreement with Iran was “over.”
The agreement had been aimed at ending hostilities between the two sides. However, Trump’s comments revived safe-haven demand as geopolitical tensions increased.
U.S. Dollar Index Moves Higher
The U.S. Dollar Index rose 0.14% in early U.S. trading.
Investors were also waiting for the Federal Reserve’s June meeting minutes later in the day. Traders were looking for fresh clues on the outlook for interest rates under new Fed Chair Kevin Warsh.
Iran Tensions Support Safe-Haven Demand
Trump’s remarks followed reports that Iranian forces attacked U.S. military facilities in Kuwait and Bahrain.
The strikes were described as retaliation for U.S. attacks on Iranian targets. They also followed Washington’s decision to revoke a sanctions waiver covering Iranian oil exports.
Iran said the decision violated the framework agreement designed to bring the conflict to an end.
The renewed tensions also pushed Brent crude prices sharply higher, with oil rising 6.6%.
Trump Says Iran Agreement Is Finished
Trump said both sides had reached an agreement, including terms linked to nuclear weapons. However, he accused Tehran of later denying key parts of the discussions in public.
Because of that, Trump said he considered the agreement finished.
His comments added pressure to global markets and increased demand for the dollar as a safe-haven currency.
Treasury Yields Rise Alongside Oil Prices
U.S. Treasury yields also moved higher as energy prices jumped.
The U.S. two-year yield rose to 4.24%, while the 10-year yield touched a one-month high of 4.60%.
Bond traders in both the U.S. and Europe adjusted to the possibility of structurally higher energy costs.
Fed Minutes Become Key Market Focus
The dollar’s gains were also supported by caution ahead of the Federal Reserve’s June meeting minutes.
This meeting was especially important because it was the first under newly sworn-in Chair Kevin Warsh.
Warsh has already changed the Fed’s communication style. He shortened the June policy statement and did not release his own interest-rate projections.
Traders Look for Clues on Rate Policy
Warsh has moved away from the detailed forward guidance used by previous Fed leaders.
Instead, he has favored a more data-dependent and less predictable approach.
As a result, traders are paying close attention to the June minutes. They want to understand how divided the Federal Open Market Committee is.
Recent projections showed that nine out of 18 policymakers expected at least one more rate hike before the end of the year.
New Zealand Dollar Outperforms
Monetary policy differences also continued to drive foreign-exchange markets.
The Reserve Bank of New Zealand raised interest rates by 25 basis points to 2.50%, as expected.
The central bank also signaled that more tightening may be needed to bring inflation back to target.
That helped the New Zealand dollar outperform. As a result, USD/NZD fell by about 0.6%.
Australian Dollar Strengthens Slightly
The Australian dollar also gained modestly.
USD/AUD slipped by around 0.2%, reflecting mild strength in the Australian currency.
Yen Remains Under Pressure
The Japanese yen stayed weak, with USD/JPY trading near ¥162.20.
That level is close to areas that have previously raised concerns about possible official intervention.
Bank of Japan board member Toichiro Asada said clearer evidence of demand-driven inflation is needed before supporting more rate hikes.
His comments reinforced expectations that Japan will normalize monetary policy only gradually.
