The dollar index (DXY00) fell by -0.05% on Wednesday. The dollar gave up an early advance on Wednesday and posted modest losses as stocks recovered from their worst levels, which reduced liquidity demand for the dollar.
The dollar initially moved higher on Wednesday amid the surge in crude oil prices as tensions between the US and Iran intensified. The stronger crude oil prices on Wednesday pushed up inflation expectations and could persuade the Fed to keep monetary policy tight, a supportive factor for the dollar. Also, the escalation of hostilities between the US and Iran has boosted demand for the dollar as a safe haven.