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TD Securities' Global Strategy Team anticipates the US Dollar will gain traction as safe-haven demand surges amid escalating geopolitical tensions, particularly the Iran-related conflict. Analysts highlight that rising risks could accelerate expectations for Federal Reserve rate cuts, with early trading showing moderate USD buying across major currency pairs. The firm emphasizes that geopolitical volatility often amplifies USD's role as a refuge asset, especially when central banks delay policy normalization. For traders, the USD's strength could create short-term opportunities against risk-sensitive currencies like the EUR and JPY. The Fed's dovish stance and potential rate cuts may also widen USD gains against emerging market currencies. However, sustained USD momentum depends on whether geopolitical tensions persist or subside. Market participants should monitor Fed officials' comments on inflation and employment data for clues on policy direction. The analysis underscores the interplay between global uncertainty and monetary policy in shaping USD trends. For Gulf investors, a stronger USD could affect local currency valuations and commodity-linked assets. Key watchpoints include Iran-US diplomatic developments, Fed meeting minutes, and shifts in risk appetite across global equity markets.
