Key facts
- The U.S. dollar stabilized on Thursday after reaching a one-month low.
- Soft inflation data supported expectations that the Federal Reserve will not raise interest rates.
- Renewed tensions in the Middle East have raised inflation concerns.
- Oil prices increased due to the geopolitical risks and inflation worries.
The U.S. dollar found stability on Thursday, recovering from a one-month low. This stabilization occurred as traders shifted their focus to inflation risks, particularly following recent geopolitical developments in the Middle East. Earlier in the session, softer-than-expected inflation data had reinforced market expectations that the Federal Reserve would maintain its current interest rate policy, refraining from further hikes.
However, the emergence of fresh tensions in the Middle East introduced a new layer of uncertainty. This geopolitical development posed a risk to the economic outlook, contributing to a rise in oil prices and reigniting concerns about a potential uptick in inflation. The combination of these factors led to the dollar finding support above its recent low.