Dollar Rises Amid Risk Aversion as Geopolitical Tensions Rise
The US dollar rose against major currencies on Tuesday, February 17, amid uncertainty and investor risk aversion, as geopolitical tensions surrounding nuclear talks between the United States and Iran escalated.
Iranian Foreign Minister Abbas Araqchi said that Iran and the United States had reached an understanding on key "guiding principles" in the second round of indirect talks on the nuclear dispute, although a final agreement was not imminent.
The United States has deployed military forces to the Middle East to pressure Tehran into making concessions, while US President Donald Trump has stated that "regime change" in Iran may be the best-case scenario.
Dollar Performance in the Markets
Eugene Epstein, head of trading at MoneyCorp, said that the dollar tends to perform better during times of uncertainty, as investors buy US Treasury bonds and sell stocks.
The dollar rose 0.57% to 0.774 Swiss francs, while the euro fell 0.34% to $1.181, heading for its sixth consecutive session of losses against the US currency. The dollar index also rose 0.41% to 97.50.
Other Currency Movements
The Japanese yen fell for the second consecutive session after ending a five-day winning streak following Prime Minister Sanae Takaichi's election victory.
The British pound dropped 0.9% to $1.3502 after data showed that the UK unemployment rate rose to a five-year high in December, with wage growth slowing, increasing the likelihood of an interest rate cut by the Bank of England.
The Australian dollar also fell 0.38% to US$0.7042.
Federal Data Awaited
Investors are awaiting the release of the latest minutes from the US Federal Reserve's meetings and key economic data later this week, amid expectations that geopolitical and economic developments will influence monetary policy decisions. The rise of the US dollar reflects a risk aversion in global markets amid escalating tensions between Washington and Tehran, while other currencies are affected by economic and political data, as investors await the Federal Reserve's upcoming decisions.
