The U.S. dollar traded near its highest levels in almost 11 months on Tuesday, as investors paused ahead of a U.S.-imposed deadline for Iran. Investors are closely watching the geopolitical situation in the Middle East, which has driven energy prices higher and boosted the dollar as a safe-haven asset.
Iran showed no immediate sign of complying with President Donald Trump's demand to reopen the Strait of Hormuz before an 8 p.m. Eastern Time deadline. Analysts suggest the dollar is likely to remain strong until a ceasefire or a significant postponement of the deadline occurs.
Brent crude futures hovered around $110 a barrel amid elevated tensions. The U.S. dollar index stood at 99.912, following a recent peak of 100.64. The yen also weakened against the dollar, nearing multi-decade lows.
Investors are also focused on U.S. economic data for clues on the Federal Reserve's next policy moves. The Personal Consumption Expenditures price index and minutes from the March Federal Open Market Committee meeting are due this week, providing insights into inflation and interest rate expectations.
Meanwhile, the euro saw a slight increase, with traders anticipating potential European Central Bank rate hikes. ECB officials have indicated readiness to act against persistent inflation.