US Dollar Index attracts some buyers to near 98.00 as Middle East conflict fuels demand

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 98.00 during the early Asian trading hours on Monday. The DXY attracts some buyers as traders seek safe-haven assets amid escalating conflict in the Middle East.

The US Dollar received some support following military actions involving the US, Israel, and Iran over the weekend.  Aerial strikes are ongoing across the Middle East, with Iranian missiles targeting Tel Aviv and Persian Gulf countries. Israel also continues to strike Iran. The action comes after weeks of warnings from Washington about Iran's nuclear weapons program and clashes between protesters and the country’s government. 

Furthermore, hotter-than-expected US Producer Price Index (PPI) data might contribute to the Greenback’s upside. This report reinforces expectations that the US Federal Reserve (Fed) will maintain higher interest rates for longer.

However, US policy turbulence might cap the upside for the DXY. The US Supreme Court ruling on February 20 struck down US President Donald Trump's sweeping "reciprocal" tariffs. Trump responded by invoking Section 122 of the Trade Act of 1974 to impose a new global tariff regime.