Asia FX Talk: USD Holds Firm, but a US-Iran Deal Risks a Reversal

The USD remains firm on rising US 2-year yields and inflation expectations, though a potential US-Iran diplomatic deal presents a major reversal risk. High oil prices and yields continue to weigh on Asian currencies like the IDR, PHP, and INR.

Key Takeaways

• 1.USD strength is currently supported by higher US 2-year yields and macro resilience, with markets pricing in a Fed hike by January 2027.
• 2.A potential US-Iran deal is the primary risk factor that could trigger a sharp reversal in USD strength and ease pressure on Asian currencies.
• 3.The PHP, INR, and IDR are particularly vulnerable to elevated US yields and Brent crude prices.

Table of Contents

• Market Highlights
• Ahead Today
• INDICATIVE RATES 22-May-2026
• Disclaimer
• CERTIFICATION
• DISCLAIMERS
• Legal entities and branches
• General disclosures
• Country and region specific disclosures

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