US dollar steadies near high as Middle East tensions rise

The U.S. dollar held steady near a one-week high on Tuesday, July 21, as financial markets balanced escalating military tensions between the United States and Iran against emerging diplomatic efforts to broker a ceasefire. The conflicting signals left the currency in a state of limbo, with investors lacking conviction to place significant directional bets.

The U.S. dollar index, which measures the currency against a basket of six peers, was largely unchanged at 100.96, close to its strongest level since July 15. The euro traded marginally higher at $1.1415, while the British pound held firm at $1.3434.

Market sentiment remained highly sensitive to developments in the Middle East, where hostilities have reignited. The U.S. military has conducted strikes against Iran for multiple consecutive nights, following the collapse of a temporary ceasefire agreement that was signed approximately one month ago. Iran has also targeted U.S. sites in the region. The conflict has centered on the strategic Strait of Hormuz, a critical global oil shipping lane, raising concerns over energy supply disruptions.

These concerns have fueled volatility in oil markets. Brent crude futures rose on Tuesday...