The US dollar achieved a marginal rise during early Wednesday trading, touching its highest levels since March 20, but then moved to erase its early gains and settled near yesterday's closing level, awaiting the release of the Federal Open Market Committee meeting minutes later today and ongoing discussions between the White House and the House of Representatives to reach an agreement on the US debt ceiling crisis.

Dollar Now

The dollar index - which measures the performance of the US currency against a basket of six major currencies - stabilized at 103.533 points, after reaching its highest level since March 20 earlier in the session at 103.772 points.

Main factors that affected the dollar's movements

The US dollar rose significantly during early trading today as investors increased demand for it as a safe haven amid geopolitical tensions following the announcement by China and Russia of their intention to sign a bilateral agreement to support the special interests of both parties, raising investor concerns about the possibility of the situation worsening in Ukraine, especially after the European Union announced sending a new batch of weapons and ammunition to Ukraine.

In addition to geopolitical tensions in international relations, the Russian Ministry of Defense also stated this morning that it had intercepted two US warplanes on the northwestern border over the Baltic Sea, noting that they were very close to the Russian border, which increased investors' aversion to risk and their demand for the dollar.

However, the dollar then moved to erase its gains and settled at the previous session's closing level amid growing uncertainty as investors turned their attention to the two main events on the agenda today: the release of the Federal Open Market Committee meeting minutes this evening, which is expected to provide some guidance to investors regarding the next step for the Federal Reserve at its upcoming June meeting.

On the other hand, markets have been closely monitoring ongoing discussions between the White House and the House of Representatives after Republican Speaker of the House Kevin McCarthy said last night that the two sides had not yet reached an agreement, adding that the government spending cuts that Republicans consider necessary remain the main sticking point in the talks.

The White House and the House of Representatives plan to resume talks on the US debt ceiling later today at 2:00 PM GMT, as the need to quickly reach an agreement increases with the approach of June, and Treasury Secretary Janet Yellen continues to warn of a possible government default on its obligations by that date.

Meanwhile, investors continued to bet on another interest rate hike at the Federal Reserve's June meeting following stronger-than-expected data for the US services Purchasing Managers' Index from S&P Global yesterday, which gives the Federal Reserve room to raise rates again at its June meeting.

The CME Group's FedWatch tool now indicates that the market pricing for a last 25 basis points interest rate hike has increased to 32.7%, instead of keeping rates unchanged, although the probabilities still point to a greater likelihood of a hold.

Dollar against major currency pairs

As for its trading against other major currencies, the euro rose against the dollar by 0.18% to 1.0787 dollars, while the British pound fell against the dollar by about 0.12% to 1.2395 dollars.

At the same time, against safe havens, the dollar declined against the Japanese yen by about 0.1% to 138.47 yen, while it rose against the Swiss franc by 0.14% to 0.9025 franc.

Regarding its performance against commodity currencies, the Australian dollar fell against its US counterpart by 0.49% to 0.6576 US dollars, while the New Zealand dollar dropped against the US dollar by about 1.76% to 0.6138 US dollars, and the US dollar rose against the Canadian dollar by about 0.24% to 1.3536 Canadian dollars.