Global markets experienced turbulence on Monday as news emerged that several oil-producing nations have reduced crude output due to disrupted exports through the Strait of Hormuz amid Iranian threats. The Strait, a critical chokepoint for global oil shipments, has seen heightened geopolitical tensions, leading to a 4% surge in Brent crude prices to per barrel. The U.S. dollar weakened against major currencies, with the DXY index dropping to 103.5, as investors shifted capital to safe-haven assets like gold and the Japanese yen. Emerging market currencies, particularly those of oil-dependent economies, faced downward pressure due to export revenue uncertainties. The USD's decline reflects reduced demand for dollar-denominated assets amid oil price volatility, which typically inverses with the greenback. Traders are now monitoring OPEC+ meetings and potential U.S. sanctions on Iranian oil exports for further clues on supply dynamics. The situation could trigger a self-reinforcing cycle where higher oil prices weaken the dollar, which in turn elevates commodity prices in USD terms. Central banks in energy-importing nations may face inflationary pressures, prompting tighter monetary policies that could ripple through global capital flows. For Gulf investors, the Strait of Hormuz's stability remains a critical risk factor given the region's economic reliance on oil exports. Saudi Arabia's Aramco is expected to adjust production quotas in its quarterly report, which could influence regional market sentiment. Traders should watch for technical support levels in the USD/JPY pair at 145.00 and the EUR/USD resistance at 1.0900. Geopolitical developments in the Persian Gulf and weekly EIA crude inventory data will be key catalysts in the coming weeks.

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