Despite the rise in oil prices, the US dollar may still struggle in the short term.

Steve Englander of Standard Chartered stated in a report that as the market focuses on interest rate differentials, the US dollar failed to benefit from the rise in oil prices in July. Since the resumption of attacks between the US and Iran, the dollar has already declined. He said that if the market assumes the inflation impact is negligible or only temporary, and expects the Federal Reserve to have a less reactive stance to rising oil prices, then the US dollar could fall further in the short term. Standard Chartered still expects the dollar to strengthen in the medium term. “However, before the dollar strengthens, we need to see a clearer cyclical rebound in the US economy, or a more distinct rise in equilibrium real [inflation-adjusted] interest rates.” The DXY US Dollar Index rose by 0.2% to 100.95.