Dollar steady, Asia FX flat as M.East uncertainty, rate jitters persist

The dollar held steady in Asian trade on Monday while most regional currencies stayed within a narrow range, as investors weighed Middle East uncertainty and shifting interest-rate expectations.

Reuters reported that the market was cautious after renewed concern around the Strait of Hormuz and ahead of key central-bank decisions in the region. Traders were also watching U.S. rate expectations, which continue to influence the direction of the dollar.

Geopolitical backdrop

The latest market tone came after the U.S. military said it would begin supporting Project Freedom on May 4 to restore freedom of navigation through the Strait of Hormuz. CENTCOM said the effort would involve guided-missile destroyers, more than 100 land- and sea-based aircraft, multi-domain unmanned platforms and 15,000 service members.

That announcement added another layer of uncertainty to a market already focused on Gulf tensions.

Central-bank focus

Policy expectations were also shaping Asia FX. The Reserve Bank of Australia’s calendar shows its Monetary Policy Board meeting running from May 4 to May 5, with the decision statement due on May 5.

For now, traders appear to be waiting for clearer signals before making bigger bets. The result is a market where the dollar is resilient and Asian currencies remain confined to a tight range.

What to watch

The next move will likely depend on whether Middle East developments calm or intensify, and whether the RBA reinforces or changes the current rate outlook. Both factors could push regional currencies out of their current range.