The U.S. dollar rose on Monday as escalating tensions in the Middle East reduced global risk appetite and increased demand for safe-haven assets.
The dollar index, which measures the currency against a basket of major peers, edged up 0.08% to 99.62.
The euro fell 0.16% to $1.1552, while the Japanese yen weakened 0.14% to 159.45 per dollar. The British pound also declined slightly to $1.3331.
The Australian dollar, often seen as a gauge of global economic sentiment, dropped 0.43% as equity markets across Asia declined sharply.
Market sentiment weakened over the weekend after U.S. President Donald Trump warned of potential strikes on Iran’s electricity infrastructure, while Iran pledged retaliatory action, including possible attacks on regional assets and continued disruption of the Strait of Hormuz.
The head of the International Energy Agency warned that the current crisis could surpass the impact of the oil shocks of the 1970s, raising concerns over global economic stability.
Analysts say investors are shifting toward currencies linked to stable or energy-rich economies, while currencies such as the euro and yen may come under pressure if the conflict continues.
Global markets reacted negatively, with major Asian stock indices falling and bond markets showing signs of stress. The U.S. 10-year Treasury yield rose to near an eight-month high of 4.415%.
Expectations of interest rate cuts by major central banks have also shifted, with rising energy prices fueling inflation concerns and prompting a more cautious approach by policymakers.
Meanwhile, cryptocurrencies showed modest gains, with Bitcoin and Ethereum both rising slightly.
Source: Reuters.
