US Dollar Index drifts higher above 98.00 on US-Iran tensions

The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 98.30 during the Asian trading hours on Monday. The DXY trades with mild gains on renewed US-Iran tensions.

Iran’s Foreign Ministry spokesman Esmail Baghaei said the US blockade of Iran’s ports and coastline is an act of aggression that violates the ceasefire, per the Guardian.

On Sunday, Iran said it is not planning to take part in the second round of talks with the US. This came as US President Donald Trump ordered US negotiators to travel to Pakistan just days before a ceasefire in the Middle East expires on April 22. Shaky prospects of a peace deal in the Middle ‌East sent investors toward safe haven currency such as the US Dollar.

"The key is still the Strait of Hormuz for many, and hopes that we could see the U.S. and Iran sit down at the negotiating table before the ceasefire ends now seem remote," said Nick Twidale, chief market strategist at ATFX Global in Sydney.

The US Retail Sales report will take center stage later on Tuesday. Retail Sales is projected to show a rise of 1.3% MoM in March, compared to 0.6% in February. However, in case of softer than expected inflation outcome, this could drag the DXY lower in the near term.