Dollar Strengthens as Trump Signals U.S.-Iran Deal Is 'Over'

The U.S. dollar advanced against a basket of major currencies on Wednesday, benefiting from a flight to safety after U.S. President Donald Trump cast doubt on a framework peace agreement with Iran. Speaking at a NATO summit, Trump accused Tehran of "double-dealing" and said of the truce, "As far as I’m concerned, it’s over," triggering an immediate move by investors into highly liquid dollar assets.

The President's comments came after an escalation in regional hostilities. Iranian armed forces announced they had attacked U.S. military sites in Kuwait and Bahrain. According to Tehran, the strikes were in retaliation for American strikes on Iranian targets and Washington's decision to revoke an oil sanctions waiver, an act Iran's foreign ministry considered a breach of the deal.

The heightened geopolitical tensions rippled across global markets. Brent crude oil prices jumped more than 6%, and U.S. Treasury yields rose, with the 10-year yield touching a one-month high as markets factored in a potential for structurally higher energy costs and increased risk.

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Contributing to the dollar's strength was market anticipation ahead of the release of the Federal Reserve's June meeting minutes. The minutes are the first under the new leadership of Chairman Kevin Warsh, whose shift away from the detailed "forward guidance" of his predecessors has increased their importance for traders seeking clues on the central bank's future policy direction.

Elsewhere in currency markets, the New Zealand dollar outperformed regional peers after its central bank delivered a widely expected 0.25% interest rate hike. In contrast, the Japanese yen remained under pressure, hovering near levels that have previously drawn official intervention, as Bank of Japan officials reiterated a gradual approach to policy normalization.