The US dollar rebounded sharply following renewed geopolitical tensions between the US, Israel, and Iran. Iranian military officials warned that global markets should brace for oil prices to surge to 0 per barrel amid the closure of the Strait of Hormuz and attacks on three vessels near the critical waterway. The Strait, which handles nearly 20% of global oil exports, remains a focal point of regional instability. Oil prices spiked on fears of supply disruptions, while safe-haven assets like the US dollar gained traction as investors sought refuge from volatility. The dollar's strength against major currencies, including the euro and yen, reflects heightened risk-off sentiment. Traders are closely monitoring oil price movements, as sustained volatility could trigger broader market corrections and impact global economic growth. Central banks may face pressure to adjust monetary policies if energy costs remain elevated, with potential spillover effects on inflation and interest rates. For Gulf investors, the situation underscores the interconnectedness of regional security and financial markets. Proximity to the Strait of Hormuz makes Gulf economies particularly vulnerable to oil price shocks. Traders should watch for further military escalations, OPEC+ policy responses, and the Federal Reserve's stance on inflation amid energy-driven price pressures. Key assets to monitor include Brent crude, USD/JPY, and gold.

Read full article from source ↗