FX.co ★ Dollar Index Below 99

The dollar index stayed below 99 on Friday as investors continued to track developments in the Middle East and digest the latest US CPI data. US and Iranian delegations are scheduled to meet in Pakistan on Saturday, while Israel has agreed to hold talks with Lebanon’s government, boosting hopes for de-escalation in the region. Even so, the Strait of Hormuz remains largely closed, keeping oil prices elevated.

The economic impact of the conflict with Iran is already evident in US inflation figures. Consumer prices rose 0.9% in March, the largest monthly gain since June 2022, lifting the annual inflation rate to 3.3%—the highest since May 2024 and broadly in line with expectations. Core CPI, however, increased more moderately to 2.6% from 2.5%, indicating that the full effect of the oil shock has yet to feed through to underlying inflation.

In this context, investors currently see little likelihood of another Federal Reserve interest-rate cut in 2026, while many economists continue to forecast one or more reductions later in the year.