Dollar Strength Remains Intact | Markets Stay Nervous Amid Middle East Stalemate and Inflation Concerns
■ Today’s Market Summary
Tokyo trading was relatively quiet.
• USD/JPY: Upper 157 range
• EUR/USD: Lower 1.17 range
• GBP/USD: Lower 1.35 range
→ While overall volatility remained limited,
the broader market continued to maintain a firm dollar-bullish tone.
■ The Core Nature of the Current Market
“Dollar buying driven by Middle East risks and renewed inflation concerns”
• Higher oil prices
• Reduced expectations for Fed rate cuts
• Prolonged geopolitical uncertainty
→ All continue supporting the dollar.
■ Middle East Situation
• Reports suggest most Iranian military capabilities have been restored
• Strait of Hormuz tensions continue
→ Energy supply concerns remain unresolved.
NY crude oil pulled back from the upper $102 range to the upper $100 area.
However,
the market remains firmly in risk-alert mode.
■ Today’s Most Important Event
• U.S. PPI (Producer Price Index)
Forecasts:
• Headline YoY: +4.8%
• Core YoY: +4.3%
→ Markets are watching closely to see whether inflation acceleration will be confirmed again following CPI.
■ FX Market Developments
• USD/JPY: Holding near elevated levels
• EUR/USD: Heavy upside resistance
• GBP: Under selling pressure due to political concerns
Reports suggesting the UK Health Secretary is preparing for a party leadership race have increased uncertainty surrounding the Starmer administration.
■ Key Focus Going Forward (Most Important)
• U.S. PPI results
• Whether crude oil can hold above $100
• Strait of Hormuz developments
• U.S.–China summit discussions
→ Market reaction to inflation data will be especially important.
■ Possible Scenarios Ahead
① Stronger-than-expected PPI
→ Further delay in Fed rate-cut expectations
→ Continued dollar buying
② Softer PPI
→ Temporary dollar correction
③ Further Middle East deterioration
→ Higher oil prices
→ Renewed safe-haven dollar buying
■ Strategy Points
• Dollar dip-buying bias remains dominant
• Watch political headlines closely for GBP
• Monitor both oil prices and bond yields simultaneously
■ Summary
The current market can be summarized as:
“A market where inflation and geopolitics continue to support the dollar.”
→ There is still a lack of major catalysts for a broad dollar breakdown.
→ The most important focus now is:
the sustainability of U.S. PPI-driven inflation pressure and crude oil strength.
