The US dollar index traded at 101.414 on the 24th at 8:13 AM Eastern Time, down 0.023 points (0.023%) from 101.437, per Yonhap Infomax. The dollar recovered to neutral after crude oil rebounded amid US-Iran military conflict. Eurozone services expansion data initially pressured the currency, but Middle East tensions drove energy prices higher. The 14-day Hormuz Strait standoff continued influencing commodity and currency markets.
Iran Attacks US Military Bases as Oil Prices Rebound
Iran's Islamic Revolutionary Guard Corps (IRGC) attacked US military installations in Kuwait and Bahrain on the 24th, according to the semi-official Tasnim News Agency. The Iranian regular military also struck a major US base in Kuwait using long-range Arash suicide drones. The military confrontation between the United States and Iran over control of the Hormuz Strait entered its 14th day.
West Texas Intermediate (WTI) crude for September delivery, which had fallen to $88.75 per barrel, rebounded toward the $90 mark following the renewed tensions between the two nations. The dollar, which had faced downward pressure from euro strength, recovered to neutral territory alongside the oil price rally.
John Evans, analyst at PVM Oil Associates, stated that "major oil-producing regions and crude supply routes are surrounded by war" and that "the short-term outlook is bullish."
Eurozone Services PMI Reaches 51.6 as EUR/USD Declines
The EUR/USD exchange rate traded at 1.13771 dollars, down 0.00023 dollars (0.020%) from the prior session. The eurozone's July services Purchasing Managers' Index (PMI) preliminary reading came in at 51.6, according to S&P Global. The reading marked a five-month high and returned to expansion territory.
Joachim Nagel, President of Germany's Bundesbank, stated on the 24th that "we still face very large uncertainties" while refraining from commenting on monetary policy direction.
Michiel Tukker, Senior Rates Strategist for UK and Eurozone at ING, analyzed that "as oil prices remain at elevated levels, markets see growing risks of second-round effects" and that "uncertainty will persist until better data on underlying inflation pressures emerges."
GBP, JPY, and CNY Show Mixed Performance Against Dollar
The GBP/USD exchange rate traded at 1.33247 dollars, up 0.00067 dollars (0.050%) from the previous session.
The USD/JPY exchange rate stood at 163.808 yen, down 0.016 yen (0.010%). The US Treasury Department emphasized the need for the Bank of Japan (BOJ) to raise policy rates the previous day and stated that excessive exchange rate volatility is undesirable, but this had limited impact on the yen.
Christian Antunes, Global Fixed Income and Currency at Lazard Asset Management, stated "we expect the yen to weaken in the medium term" and that "market intervention works against fundamentally-driven flows and will continue to buy time rather than change direction."
The offshore USD/CNY exchange rate traded at 6.7729 yuan, down 0.0051 yuan (0.075%) from the prior session.
FAQ
What caused the US dollar index to decline on the 24th?
The dollar index fell 0.023 points to 101.414 at 8:13 AM Eastern Time on the 24th, initially pressured by eurozone services PMI data showing expansion to 51.6. However, the currency recovered to neutral territory after crude oil prices rebounded due to military conflict between the United States and Iran over the Hormuz Strait.
How did the Iran-US conflict affect oil prices?
West Texas Intermediate (WTI) crude for September delivery rebounded toward $90 per barrel after falling to $88.75, following Iran's attacks on US military bases in Kuwait and Bahrain on the 24th. The 14-day standoff over Hormuz Strait control continued to support oil prices, with analysts citing major oil-producing regions surrounded by conflict.
What was the eurozone services PMI reading for July?
The eurozone's July services Purchasing Managers' Index (PMI) preliminary reading reached 51.6 according to S&P Global, marking a five-month high and returning to expansion territory above the 50 threshold that separates growth from contraction.
