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09.09.202601:45:20UTC+00Dollar Steadies as Oil Prices Climb

The dollar index stabilized around 98.8 on Wednesday, halting its recent slide as climbing oil prices stoked inflation concerns and reinforced expectations of a Federal Reserve rate hike. Oil extended its rally after US forces destroyed five Iranian crude tankers near Kharg Island in retaliation for attempted missile strikes on a US warship.

Investors are also looking ahead to key US inflation figures due this week, which could offer further insight into the Fed’s policy stance before next week’s meeting. Futures markets are currently pricing in roughly a 60% probability of a 25-basis-point increase in the federal funds rate, following stronger-than-expected US employment data released on Friday. The European Central Bank and the Bank of Japan are likewise expected to tighten policy this month.

At the same time, the dollar stayed under pressure against the yen after Treasury Secretary Scott Bessent cautioned traders against betting on additional weakness in the Japanese currency.

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