The US Dollar (USD) reversed its four-day winning streak on Monday as markets digested the US military strike on Iran's Kharg Island, a critical oil hub in the Persian Gulf. The attack, which targeted Iranian oil infrastructure, raised concerns about potential disruptions to global oil supplies through the Strait of Hormuz. The US warned that continued Iranian naval provocations in the region could lead to further military actions. Meanwhile, traders are closely watching upcoming meetings of the Federal Reserve and the European Central Bank for potential policy shifts. The USD's pullback reflects heightened geopolitical risks and uncertainty about oil market stability. A prolonged conflict in the Persian Gulf could push oil prices higher, indirectly weakening the USD as energy costs rise. Conversely, a swift resolution might ease fears and stabilize the dollar. Traders are also balancing the impact of central bank decisions against the backdrop of a resilient US economy and mixed global growth prospects. For forex markets, the coming week will be pivotal. The Fed's stance on inflation and growth, combined with the ECB's response to the energy crisis, will shape USD momentum. Oil prices remain a key wildcard, with any escalation in the US-Iran standoff likely to drive volatility. Investors should monitor military developments in the Strait of Hormuz and central bank policy signals for directional clues.

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