Dollar Strength Remains Intact | Markets Stay Nervous Amid Middle East Stalemate and Inflation Concerns

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.