The US dollar surged to a four-month high amid geopolitical tensions following Trump's statements on Iran and unwinding of record bearish positioning. Trump's claims that Iran was 'about to surrender' and threats of military action contrasted with Iran's defiant response, fueling risk-off sentiment. UK GDP data below expectations and mixed CPI figures from Spain and France added to the dollar's strength. The greenback's gains were further supported by increased rate hike bets for other central banks, despite a lack of major data releases. The dollar's rally impacts forex markets, with EUR/USD and GBP/USD under pressure. Traders are hedging against potential volatility from Iran-related developments and central bank policy shifts. The unwinding of February's extreme bearish positioning suggests a reversal in market sentiment, with the dollar now favored as a safe-haven asset amid uncertainty. MENA investors should monitor Iran's strategic moves, including threats to block the Strait of Hormuz, which could disrupt oil flows and trigger broader market panic. Upcoming central bank meetings and US economic data will be critical for the dollar's trajectory. The UK's weak GDP report also highlights risks for the pound, which could affect Gulf investors with European market exposure.

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