• The US Dollar Index tests levels above 100.00, fuelled by risk-off trading.
• Trump reiterated its threats on Iran and crushed hopes of a swift end to the war.
• US ADP Employment and manufacturing activity data beat expectations in March.

The US Dollar (USD) is regaining lost ground on Thursday, and the DXY returns to levels above the 100.00 line at the time of writing, buoyed by the risk-averse sentiment. US President Donald Trump crushed hopes of a swift end to the Iran war and sent the Greenback higher across the board.

The “important update” on Iran announced by Trump 24 hours before was a reiteration of the aggressive rhetoric continuously repeated over the last four weeks, with threats of “extremely hard” attacks on Iran, and calls on allies to “build up the courage” to secure the Strait of Hormuz.

Iranian President, Masoud Pezeshkian, has responded with an open letter to the people in the US, questioning whether the war in Iran responds to Trump’s “America First” pledge. Meanwhile, Israel and Iran have continued exchanging missiles and drones, while Tehran affirmed that Washington’s demands for a peace deal are “maximalist and irrational.”

US data beats expectations in March

In the macroeconomic domain, US data released on Wednesday was dollar-supportive. The ADP Employment Change showed a 62K net job increase in March, beating expectations of a 40K rise, while February’s data was revised up to a 66K increase from previous estimations of  63K.

Beyond that, the ISM Manufacturing Purchasing Managers’ Index (PMI) improved to 52.7, its highest reading since July 2022, from 52.4 in February, also beating estimations of a slower improvement, to 52.5. The optimism about the headline figures, however, was offset by higher costs and soft employment figures.

The focus now is on the Nonfarm Payrolls report, due on Friday. The market consensus anticipates an improvement in job creation with 60K new payrolls to partially offset the 92K decline seen in February. These figures are likely to set the Federal Reserve’s near-term stance and might have a significant impact on Dollar crosses.