Dollar Strengthens Amid Renewed U.S. Strikes on Iran

The dollar firmed as renewed U.S. strikes on Iran dampened hopes for a ceasefire, driving cautious investor behavior. This bolstered demand for the dollar while affecting global currencies and commodities. Oil prices saw volatility, and global markets reacted to U.S. military actions and shifting sentiment.

The dollar gained strength on Tuesday as renewed U.S. strikes against Iran cast doubt on a near-term ceasefire, prompting cautious investor behavior and boosting demand for the greenback.

Iran accused the U.S. of violating a ceasefire with what they called defensive strikes in southern Iran. Meanwhile, U.S. Secretary of State Marco Rubio mentioned the possibility of negotiations but indicated that concluding a deal could take several more days.

Previously, peace deal hopes had driven oil prices below $100 a barrel, with eased demand for the dollar. However, as investor confidence in a quick resolution waned, dollar demand slightly increased, said Marc Chandler, chief market strategist at Bannockburn Global Forex.

Oil prices saw fluctuations at the start of Tuesday's trading, reacting to the U.S. strikes. Brent crude futures rose 3.89% to $98.87 a barrel. In contrast, U.S. consumer confidence fell in May due to inflation concerns linked to the conflict, offsetting positive perceptions of the labor market, Chandler added.

The British pound fell 0.3% against the dollar, while the yen weakened further amid shifting market sentiments.