A recent FBI warning to California police departments has raised concerns about Iran's alleged plan to conduct a surprise drone attack on unspecified targets in the United States, particularly in California, in retaliation for potential U.S. military strikes. The report, cited by ABC News, suggests Iran and its allies may also target U.S.-owned oil infrastructure and hotels frequented by Americans. While the FBI has not confirmed an imminent operation, the threat has triggered risk-off sentiment in financial markets, with traders anticipating geopolitical tensions escalating into prolonged conflicts. The potential for a U.S.-Iran confrontation poses significant risks to global markets, particularly in forex and commodities. A prolonged military conflict could destabilize oil prices, disrupt trade routes, and weaken the U.S. dollar as investors seek safe-haven assets. The USD/SGD and USD/AED pairs are particularly vulnerable due to their sensitivity to Gulf-region geopolitical developments. Central banks in the Middle East may also intervene to stabilize local currencies amid heightened uncertainty. For Gulf investors, the situation underscores the importance of hedging against currency volatility and geopolitical shocks. Key assets to monitor include the U.S. dollar index, oil prices, and regional equity markets. Traders should watch for updates from the U.S. State Department and Iran’s official statements, as well as any military movements in the Persian Gulf. A de-escalation or diplomatic resolution could ease market anxiety, while further aggression might trigger broader market selloffs.

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