The US dollar declined against major currencies on the 22nd, with the dollar index falling 0.056% to 101.122 as of 4pm Eastern Time in New York trading. The euro strengthened amid surging natural gas prices and speculation over a European Central Bank rate hike, while concerns over prolonged US-Iran tensions coexisted with diplomatic hopes. Brent crude oil jumped 3.36% to $94.07 per barrel after President Donald Trump threatened strikes on Iranian infrastructure if attacks on Hormuz Strait shipping continued, though Secretary of State Marco Rubio stated the US remains open to diplomatic engagement with Iran.
Dollar Weakens Against Euro and Yen on 22nd Trading Session
According to Yonhap Infomax data as of 4pm Eastern Time on the 22nd, the USD-JPY exchange rate fell 0.058 yen (0.036%) to 163.148 yen compared to the previous New York close of 163.206 yen. The EUR-USD rate rose 0.00096 dollars (0.084%) to 1.14112 dollars. The EUR-JPY rate increased 0.100 yen (0.054%) to 186.18 yen. The dollar index, which measures the dollar's value against six major currencies, declined 0.057 points (0.056%) to 101.122.
![Dollar Index Intraday Movement]()
Dollar Index Intraday Movement [Source: Yonhap Infomax]
The euro gained strength as Dutch TTF natural gas futures, the benchmark for European natural gas markets, surged 4.92%, raising inflation concerns in the Eurozone.
Trump Threatens Iran Infrastructure Strikes Amid Oil Surge
President Donald Trump stated on the 22nd that if Iran attacks ships passing through the Hormuz Strait, "the United States will bomb and destroy one bridge or power plant, including facilities located near or within the capital Tehran." Mohammad Bagher Ghalibaf, speaker of Iran's parliament responsible for negotiations with the US, responded by vowing retaliation: "If we cannot export oil, no one in the region (Middle East) will be able to export oil."
Brent crude oil for September delivery closed at $94.07 per barrel, up 3.36% from the previous session. The dollar index initially recovered to flat territory following Trump's threat but failed to sustain gains.
Secretary of State Marco Rubio said on the 22nd that the US has an "open mind" regarding diplomacy with Iran, stating "the United States is willing to engage in positive and constructive negotiations and discussions if commitments are kept." Juan Perez, head of trading at Monex USA, noted: "The overall perception is that because the scope of this situation is very broad and things have escalated too much, there will be immediate attempts to urgently end it. That is the current market narrative supporting the market, which is not a very positive factor for the dollar."
ING Strategist Cites ECB Hawkish Tilt Ahead of 23rd Meeting
Francesco Pesole, foreign exchange strategist at ING, raised the possibility of a "surprise" rate hike by the European Central Bank on the 23rd, stating: "We expect the hawkish camp within the Executive Board to continue to prevail." He forecast that "market pricing will tilt toward one or two rate hikes by year-end."
UK June CPI Rises 2.6% Below Forecast
The UK's June Consumer Price Index rose 2.6% year-over-year, below the market forecast of 2.7%. The GBP-USD exchange rate fell 0.00068 dollars (0.051%) to 1.33736 dollars compared to the previous session.
Charlotte O'Leary, associate researcher at the National Institute of Economic and Social Research (NIESR), stated: "We forecast inflation will rise again from July through the first quarter of next year. However, nominal wage growth continues to slow, so the effect of high prices transferring to wages will be limited." She assessed that "the Bank of England has room to hold rates once again."
The offshore USD-CNH exchange rate rose 0.0065 yuan (0.096%) to 6.7751 yuan compared to the previous session.
FAQ
What caused the US dollar to fall on the 22nd?
The dollar index declined 0.056% to 101.122 on the 22nd due to euro strength driven by surging European natural gas prices (Dutch TTF futures up 4.92%) and speculation over a European Central Bank rate hike on the 23rd. Diplomatic hopes regarding US-Iran tensions also weighed on the dollar despite oil price surges.
What did President Trump threaten regarding Iran on the 22nd?
President Donald Trump stated on the 22nd that if Iran attacks ships passing through the Hormuz Strait, the United States will bomb and destroy one bridge or power plant, including facilities located near or within Tehran. Brent crude oil surged 3.36% to $94.07 per barrel following the statement, though Secretary of State Marco Rubio later said the US remains open to diplomatic engagement with Iran.
