Dollar holds near 2-month high on jobs data

​

The U.S. dollar held steady near a two-month high on Thursday, June 4, 2026, supported by ongoing Middle East tensions and expectations that the Federal Reserve will keep interest rates higher for longer. The Dollar Index remained close to recent peaks during Asian trading hours, reflecting steady demand for the greenback amid cautious global sentiment.

Geopolitical Developments and Safe-Haven Demand

The dollar remained supported by heightened geopolitical uncertainty in the Middle East:

· Washington confirmed an Israel-Lebanon ceasefire agreement, though conditional on reduced hostilities

· Reports of Iranian missile strikes on Kuwait and Bahrain added to market caution

· U.S. military strikes near Iran’s Qeshm Island further increased tensions

· Uncertainty around the Strait of Hormuz continued to support safe-haven demand for the dollar

U.S. Economic Data and Fed Expectations

Stronger-than-expected economic indicators reinforced expectations of prolonged restrictive monetary policy:

· ADP data showed 122,000 jobs added in May

· ISM services index rose to 54.5 in May from 53.6 in April

· ISM prices-paid component climbed to its highest level in nearly four years

· Markets scaled back expectations for near-term Federal Reserve rate cuts

Investors are now focused on upcoming U.S. nonfarm payrolls data for further policy signals.

Yen Remains Under Pressure

The Japanese yen continued to trade weak against the U.S. dollar, with USD/JPY hovering near the psychologically important 160 level at around 159.97 yen. Markets remain on alert for possible intervention from Japanese authorities as the currency approaches key thresholds.

· USD/JPY traded near 159.97 yen, close to 160 level

· Risk of intervention from Japanese policymakers remains elevated

· Wide yield differentials between the U.S. and Japan continue to pressure the yen

· Seasonal weakness in June adds additional downside pressure

The dollar’s resilience highlights the current dominance of safe-haven flows in global markets, with geopolitical risk and strong U.S. data continuing to reinforce its position despite growing volatility in other asset classes.