Dollar Firms After Hot CPI, Oil Above $100 and Iran Talks Stall

The U.S. dollar strengthened Tuesday after consumer inflation came in hotter than economists expected and oil prices climbed back above $100 a barrel. Stalled diplomatic talks between the U.S. and Iran also added to demand for the dollar, sending the Dollar Index higher while the euro and pound slipped.

Headline consumer prices rose 3.8% year-over-year compared with 3.7% expected, and core CPI, which excludes food and energy, was 2.8% versus forecasts of 2.6%. Traders moved to price in a higher-for-longer stance for the Federal Reserve. The producer price index is scheduled for release Wednesday and market participants were watching it for further signs of inflation persistence.

West Texas Intermediate crude traded above $100 a barrel. Reports that Iran may lower some enriched uranium levels to 3.7% and 20% did not produce an agreement in talks, and the continued uncertainty about supply helped support energy prices and safe-haven flows into the dollar.

Foreign-exchange desks pointed to the combination of the stronger CPI print and higher oil as factors boosting dollar demand. Currency traders adjusted positions toward assets perceived as safer amid the mix of elevated energy costs and unresolved geopolitics.

On technical charts, the Dollar Index moved out of an end-March downward channel after forming a triple bottom near the 97.50 area. Traders described consolidation roughly between 98.00 and 100.00, with near-term resistance around 98.50–98.70 and larger resistance toward 100.00–100.50. Support levels cited include 97.40–97.60 and the mid-96 area seen earlier in the year.

EUR/USD fell from resistance around 1.18 toward a 1.17 pivot, with four-hour momentum indicators weakening and the pair breaching its 50-period moving average on that timeframe. Market attention focused on whether 1.1720 would hold, with deeper support around 1.1625 and the mid-1.15 area.

GBP/USD remained in a broader range between about 1.3410 and 1.36 but moved lower after rejecting resistance. Traders pointed to capital outflows and recent ministerial resignations in Prime Minister Keir Starmer’s government as factors weighing on the pound. Key support levels noted include the 1.3417 2024 top and a pivot zone near 1.3250–1.3310.

Analysts highlighted the role of rising gasoline prices in the CPI outturn, noting energy costs contributed to the hotter inflation print. With several economic releases due this week, market participants said they would monitor incoming data for additional indications about inflation trends and central bank policy.