Dollar Advances on Strong U.S. Data as Geopolitical Risks Linger

Key Takeaways:

• Dollar index strengthened on a run of better-than-expected U.S. economic data.

• Retail sales surprised to the upside, reinforcing optimism over U.S. consumer resilience.

• Housing data beat forecasts, adding to evidence of economic momentum.

Market Summary:

The U.S. dollar advanced against a basket of six major currencies, supported by a string of stronger-than-expected U.S. economic indicators that reinforced confidence in the resilience of the worlds largest economy. Improved data helped lift market optimism around U.S. growth prospects, prompting renewed demand for the greenback.

According to data from the U.S. Census Bureau, retail sales rose sharply by 0.6%, rebounding from a prior decline of 0.1% and exceeding market expectations of a 0.5% increase. Core retail sales, which exclude autos, also came in firmer than anticipated at 0.5%, above forecasts of 0.4%. Meanwhile, the housing sector showed additional signs of stability, with existing home sales rising to 4.35 million, beating expectations of 4.21 million. Together, the data suggested that consumer spending and housing activity remain supportive pillars of U.S. economic growth, lending near-term bullish momentum to the dollar.

Beyond macroeconomic data, the greenback has also continued to benefit from safe-haven demand amid rising geopolitical tensions. Investor caution has increased following the detention of Venezuelan leader Nicolás Maduro by U.S. authorities, alongside comments from President Donald Trump expressing renewed interest in the United States acquiring Greenland. These developments added to global uncertainty and encouraged defensive positioning in currency markets.

Attention has also turned to Iran, where geopolitical risks remain elevated. Iranian officials said communications with Washington remain open as President Trump considers potential responses to a deadly crackdown on protests—events that represent one of the most significant challenges to Irans clerical leadership since the 1979 Islamic Revolution. The situation has injected additional uncertainty into global markets, further supporting demand for the dollar as a perceived safe asset.

Looking ahead, while recent economic data have provided near-term support, the longer-term outlook for the dollar remains uncertain, as geopolitical risks and potential U.S. foreign policy actions—particularly in the Middle East—continue to shape investor sentiment. Markets are likely to remain sensitive to both incoming economic data and developments on the geopolitical front as they reassess the trajectory of U.S. growth and policy.