The USD/SGD currency pair maintained ground near a 6-week high of 1.2836 on Tuesday, with the greenback remaining well bid.
Despite a revival in optimism around a possible US-Iran peace agreement, investors remain cautious amid persistent disputes over Tehran’s nuclear program and issues surrounding the Strait of Hormuz.
US President Donald Trump recently canceled a planned military strike on Iran and commented that there was a good chance an Iran nuclear deal could be reached. The subdued market response to these remarks suggests lingering skepticism over a swift resolution to the Iran conflict. This ongoing uncertainty is likely to continue supporting the safe-haven appeal of the US Dollar.
In addition, firmer-than-anticipated US inflation readings have reinforced hawkish messaging from Federal Reserve officials. According to pricing in the fed funds futures market referenced by the CME FedWatch tool, traders see a 35.0% likelihood that the Federal Reserve will raise interest rates by 25 basis points by year-end.
Attention is now turning to the upcoming release of the Federal Open Market Committee minutes on Wednesday, which could provide further clarity on the Fed interest rate outlook.
The USD/SGD currency pair was last up 0.27% on the day to trade at 1.2815.
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