Dollar Steady Near Multi-Week Highs Following Inflation Surprise

The US dollar advanced following the release of stronger-than-expected US inflation data overnight. On Asian trading today (May 13), the US Dollar Index (DXY) remained steady near the 98.30 level.

According to the latest report from the US Bureau of Labor Statistics, core inflation accelerated notably in April 2026. Annual core inflation rose from 2.6% to 2.8%, while headline inflation climbed from 3.3% to 3.8% year-on-year. Both were recorded above market expectations. In fact, the rise in overall inflation is the highest since May 2023.

The increase in price pressures is primarily triggered by surging crude oil prices as the conflict between the United States and Iran continued to intensify. The war, which has now lasted for nearly two and a half months, has shown little sign of easing.

Earlier this week, Iran reportedly rejected a peace proposal from Washington while maintaining its previous demands. US President Donald Trump responded harshly, describing the demands as "garbage" and warning that ceasefire conditions with Iran had reached a critical stage.

Amid heightened geopolitical uncertainty, the US dollar once again attracted safe-haven demand. At the same time, higher inflation data further strengthens the view that the Federal Reserve will keep interest rates high for a longer period.

According to CME FedWatch estimates, traders are now pricing in the possibility that the Fed may leave interest rates unchanged throughout this year. Markets are even assigning roughly a 35% probability of a 25-basis-point rate hike in December.

The strengthening of the US dollar is also supported by developments from other countries. The GBP/USD pair is under pressure due to political turmoil affecting UK Prime Minister Keir Starmer. On the other hand, AUD/USD and NZD/USD are moving cautiously ahead of President Trump's meeting with President Xi Jinping of China this week.