Strong Payrolls Data Keeps Dollar Supported Amid Geopolitical Risks
The US dollar traded in a narrow range after receiving support from stronger-than-expected labor data. Investors also kept a close watch on renewed geopolitical tensions in the Middle East.
The US Dollar Index (DXY) hovered around 98.00 on Monday (May 11), rising a modest 0.29% from its opening level. Demand for the greenback as a safe-haven asset remained firm following last week’s Nonfarm Payrolls release and growing concerns over a potential escalation between the United States and Iran.
Data released on Friday showed that US nonfarm payrolls increased by 115,000 jobs in April 2026, nearly double market expectations. The stronger labor report reinforced expectations that the Federal Reserve could maintain higher interest rates for longer. Meanwhile, the US unemployment rate held steady at 4.3%, in line with market forecasts.
Geopolitical developments also continued to underpin the dollar. President Donald Trump reportedly rejected Iran's response to a peace proposal put forward by Washington, dampening market optimism over a potential resolution to the Middle East conflict and the reopening of the Strait of Hormuz in the near term.
In a post on Truth Social, Trump said he found Iran's response completely unacceptable, although he did not provide further details regarding the proposal or Washington's next steps.
Amid the renewed tensions, Brent crude oil prices climbed again, reaching as high as USD109 per barrel.
Despite the geopolitical backdrop, most major currency pairs continued to trade within the narrow ranges established since the middle of last week. Investors are now awaiting Iran's next response while also monitoring Trump's scheduled visit to Beijing on May 13-15, 2026. In other words, geopolitical developments remain the primary focus for global markets.
Analysts at Barclays noted that the dollar had weakened throughout the previous week as markets closely watched the possibility of a gradual reopening of the Strait of Hormuz, with hopes of a potential breakthrough coinciding with a meeting between Trump and Chinese President Xi Jinping. However, they also said that US economic data remained solid and that labor market conditions appeared to have stabilized in recent releases.