US Dollar Rebounds from Lows Near 99 as Treasury Buybacks, Iran Sanctions and Tariff News Drive Currency Markets

The US Dollar Index tested resistance at 99.04 on Monday, staging a partial rebound after recent weakness tied to the Treasury Department's expanded bond buyback program, which analysts say has raised concerns about US fiscal policy and weighed on the dollar. The DXY briefly crossed back above 99, though the move was described as a bear flag pattern, suggesting underlying selling pressure remains. The dollar's earlier weakness supported major currencies broadly: GBP/USD held above 1.3660 with the recent high of 1.3817 back in focus, while EUR/USD slipped to around 1.1660 after last week's surge, with ING maintaining a forecast of 1.17 by September 2026 and 1.18 by year-end.

USD/JPY dip-buyers turned more aggressive following the fading impact of last month's dual intervention, with buyers establishing higher lows heading into the Jackson Hole symposium. The Canadian dollar fell after the US announced new tariff increases, while dollar strength also followed fresh Iran sanctions. Gold and Bitcoin rallied alongside the dollar's prior weakness, with analysts framing both moves as a vote against the dollar amid fiscal uncertainty.

Materials stocks declined as the dollar rebounded, consistent with the inverse relationship between dollar strength and commodity-linked equities.