Dollar steady amid investor concerns over Middle East tensions

The dollar strengthened slightly on Thursday amid the threat of an escalating conflict in the Middle East. The growth of geopolitical tension contributed to the US dollar's restoration as a safe-haven asset and an increase in its rate, as reported by Reuters.

The Federal Reserve (Fed) kept rates unchanged at its last meeting, as had been expected. Policymakers made it clear that they still plan to ease monetary conditions by half a percent this year.

However, not all officials agreed on the need for such measures. According to Fed Chairman Jerome Powell, goods prices inflation in the US will rise during the summer as tariffs will start to affect consumers. Thus, as Reuters reports, the Fed's future rate path remains uncertain and concerning for market participants.

Given that geopolitical factors and high oil prices are not "US-induced risks", the dollar may regain its status as a safe-haven asset, ING strategist Francesco Pesole said. The expert emphasized that under the current circumstances, the US currency is still in a more favorable position compared to energy-dependent alternatives (e.g., the euro).