US Dollar Dips as Trump Pauses Iran Strike, Fed Holds Firm
US Dollar Retreats as Trump Puts Iran Strike on Hold, Fed Outlook and Housing Data Add Pressure.
The US Dollar Index (DXY) eased back to 98.60 on Friday, losing ground after rising to a weekly high of 99.15, as markets reacted to fresh comments from the White House suggesting a possible delay in military action against Iran.
In a statement that caught traders’ attention, White House Press Secretary Karoline Leavitt, citing President Donald Trump, announced that a final decision on launching a strike against Iran would be made within two weeks. “Given the substantial possibility of negotiations with Iran soon, I will decide within the next two weeks whether or not to proceed,” said Trump, as reported by ANI News.
The reversal in tone led to a softening in safe-haven demand for the Greenback, which had previously surged following a Bloomberg report indicating that senior U.S. officials were preparing for a potential strike as early as this weekend.
Fed’s Hawkish Stance Limits Dollar’s Decline
Despite the Dollar’s retreat, downside risks appear contained thanks to a hawkish Federal Reserve stance. On Wednesday, the Fed updated its long-term rate projections, forecasting a target rate of 3.6% for 2026 and 3.4% for 2027, underscoring ongoing concerns about persistent inflationary pressures.
This forward guidance has given some support to the Dollar, tempering the impact of geopolitical uncertainty and weaker macroeconomic data.
US Housing Data Adds to Economic Jitters
On the domestic front, economic indicators added further caution to the market mood. U.S. Housing Starts fell sharply in May to 1.256 million units, missing expectations of 1.360 million and down from April’s 1.392 million. The pullback in residential construction activity highlights the impact of rising mortgage rates and growing policy uncertainty under President Trump’s leadership.
The downturn in demand is already hitting builder sentiment. According to Reuters, the National Association of Home Builders’ Housing Market Index dropped to 32 in June—the lowest level since December 2022—as developers respond with price cuts to attract wary buyers.
Summary
With geopolitical tensions easing and housing data pointing to domestic weakness, the US Dollar is facing a mixed outlook. While Trump’s delay on Iran strikes cools demand for safe-haven assets, the Fed’s hawkish signals provide some cushion for the Greenback. However, traders remain on edge, watching both global developments and economic signals for the next decisive move.
