Why is the U.S. dollar near a one-week high according to the news?

The U.S. dollar held near a one-week high due to a combination of souring risk sentiment following a 'hot' U.S. inflation reading — with the CPI rising 3.8% year-on-year through April, the highest since May 2023 — and renewed Middle East uncertainty that pushed oil prices higher and dimmed hopes for a peace deal; these factors drove Treasury yields up and strengthened bets on Federal Reserve rate hikes, particularly a 25-basis-point increase in December, which rose to a 35% probability according to CME's FedWatch Tool.

What did U.S. President Donald Trump say about the ceasefire prospects with Iran, and how did it affect market sentiment?

U.S. President Donald Trump stated that a ceasefire with Iran was 'on life support' after Tehran rejected a U.S. proposal to end the war and insisted on a list of demands that Trump dismissed as 'garbage'; this lack of progress in peace talks contributed to renewed Middle East uncertainty, which in turn soured risk sentiment, lifted oil prices (Brent crude futures settled near $108 a barrel), and supported the U.S. dollar’s strength.

Dollar near one-week high as hot U.S. inflation fans Fed hike bets, peace talks stall

May 12, 2026

The US dollar strengthened against major currencies as inflation data fueled Federal Reserve rate hike expectations. Meanwhile, geopolitical tensions in the Middle East drove Brent crude oil prices up to $108 per barrel.

reuters

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