White House delays Iran strike decision,Usdt wallet sign up reducing safe-haven demand for USD
Revised Fed dot plot signals fewer rate cuts through 2027 than previously expected
US housing sector shows pronounced slowdown amid mortgage rate pressures
Market participants witnessed a notable retracement in the US Dollar Index (DXY) as geopolitical tensions showed signs of temporary de-escalation. The currency benchmark retreated to 98.60 during Friday's European session after White House officials indicated President Trump would delay any potential military action against Iran for at least two weeks.
Press Secretary Karoline Leavitt's statement regarding ongoing diplomatic considerations created immediate ripple effects across currency markets. "The administration will evaluate all options regarding Iran within the coming fortnight," Leavitt noted, according to press reports. This development prompted investors to partially unwind their dollar positions established earlier in the week.
The dollar's pullback follows its strongest weekly performance in months, fueled initially by Bloomberg's midweek report suggesting imminent military action against Iran. Such geopolitical developments typically bolster demand for the US currency as a traditional safe-haven asset.
Monetary policy considerations continue to influence dollar dynamics, with Wednesday's Federal Reserve projections revealing a more hawkish long-term stance. Updated dot plot forecasts now anticipate terminal rates of 3.6% and 3.4% for 2026 and 2027 respectively - notably higher than previous estimates. This structural shift in rate expectations may limit the dollar's downside potential moving forward.
Economic indicators revealed growing headwinds in the US housing sector, with May's Housing Starts data disappointing analysts. The 1.256 million unit figure fell substantially short of consensus estimates, reflecting the combined impact of elevated mortgage rates and policy uncertainty. Homebuilder sentiment, as measured by the NAHB index, deteriorated to its lowest level since late 2022, signaling potential challenges ahead for the construction industry.
Market analysts suggest these housing market developments could have broader implications for consumer spending patterns and economic growth projections. The sector's sensitivity to interest rate movements makes it a key indicator for assessing the real-world impact of monetary policy decisions.