USD: Risk-off tone supports Dollar – ING

FXStreetApr 2, 2026 8:44 AM

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ING analysts Francesco Pesole, Frantisek Taborsky and Chris Turner note that the US Dollar has regained support as risk-off sentiment returns following renewed Middle East escalation and uncertainty around the Strait of Hormuz. They highlight upcoming comments from Federal Reserve officials and US non-farm payrolls as key for Fed repricing and Dollar direction in the coming days.

Dollar rebounds with risk-off sentiment

"USD‑bearish trades gathered further momentum yesterday on optimism around a potential Middle East de‑escalation. However, it didn't get far after a new wave of escalation in US President Donald Trump's speeches to the nation indicated more weeks of fighting, returning a risk-off sentiment to the market today and reversing most of the recovery from the last two days."

"President Trump said Iran has requested a ceasefire, though he stressed this would be contingent on the reopening of the Strait of Hormuz. This marks a shift in Trump’s narrative relative to recent days, when he had suggested a willingness to distance the US from decisions surrounding the Strait’s fate."

"We’ll hear from the Federal Reserve's Lorie Logan and Michelle Bowman today, but Monday’s dovish-leaning comments by Chair Jerome Powell will continue resonating loudly with markets. Tomorrow’s non-farm payrolls can have decent impact potential. They won’t be telling us too much about the war's impact on jobs yet, but they could shed more light on the state of the labour market amid the shock, which could materially steer the Fed’s assessment at this stage."

"Yesterday’s ADP payrolls were stronger than expected at 62k, and the ISM manufacturing employment index was almost unchanged at 48.7 in March. Consensus for the NFP is 65k, our macro team’s call is 60k and the Bloomberg whisper number is now 40k. We agree with consensus that unemployment will remain at 4.4% – any material jump here can have an outsized impact."

"Watch for reduced liquidity conditions tomorrow and Monday due to the Easter holidays."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.

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