US Dollar Greenback stays under pressure as Treasury yields and oil prices fall

The US dollar remained under pressure on Wednesday after falling to a three-week low in the previous session, as lower Treasury yields and easing crude oil prices reduced its appeal.

The Australian dollar traded near a three-week high against the greenback after Reserve Bank of Australia Deputy Governor Andrew Hauser warned that the inflation outlook had become “materially worse”. His comments left uncertainty over whether the central bank would raise interest rates again next month.

The Australian dollar rose 0.1% to $0.7013, just below Tuesday’s high of $0.7017.

The US dollar index, which measures the currency against six major peers, was little changed at 101.78 after falling 0.2% on Tuesday.

Investors have continued to use the dollar as a safe-haven asset amid volatility linked to the Middle East conflict and developments in artificial intelligence. The United States’ energy independence has also supported the currency’s appeal during periods of geopolitical uncertainty.

Oil prices eased overnight after reaching a five-month high. Traders weighed a meeting between Iran’s president and Pakistan’s army chief, who has been involved in US-Iran mediation efforts, against continued Houthi attacks on Saudi infrastructure and reports of vessels being attacked in the Gulf.

Meanwhile, Wall Street recorded gains as technology companies began reporting earnings, including SpaceX. Asian markets also advanced, with Japan’s Nikkei and South Korea’s KOSPI rising on Wednesday.

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Carol Kong, an economist and currency strategist at Commonwealth Bank of Australia, said technology companies’ earnings could significantly influence the dollar because equity market sentiment and growth expectations were closely linked to the performance of major technology firms.

She said the dollar had been the strongest performer among traditional safe-haven assets this year. Demand could weaken if the Middle East conflict ended and energy prices fell further, although she expected the currency to rise modestly in the coming months as foreign investment in US markets increased.

Elsewhere in currency markets, the dollar was little changed at 158.33 yen. It also held steady at $1.1229 per euro and $1.33735 against sterling.

Investors remained cautious about the euro as France faced widespread anti-government protests and mounting fiscal pressures.

The French government said on Tuesday it would reinforce police with troops and deploy a major security operation ahead of further protests planned for Saturday. Officials also acknowledged shortcomings in the response to violence during demonstrations the previous weekend.

Attention is now turning to a series of central bank decisions. The US Federal Reserve, European Central Bank and Bank of Japan are scheduled to announce policy decisions on consecutive days beginning next Wednesday.

Traders do not expect any of the three institutions to change interest rates at their upcoming meetings.

The Reserve Bank of New Zealand and the Bank of Canada are due to announce decisions on the same day as the Federal Reserve. Markets are pricing in quarter-percentage-point rate increases by both central banks.

The New Zealand dollar fell 0.1% to $0.5677 on Wednesday, while the Canadian dollar was steady at C$1.4064.