USD Strengthens as Rising Yields, Geopolitical Tensions Dominate FX Markets

The US dollar gained broad support during Monday's session as rising Treasury yields bolstered demand for the greenback amid escalating geopolitical tensions surrounding Iran. Reports from Al Hadath suggest Trump has decided to attack Iran, while VP Vance cited progress in diplomatic talks, creating conflicting signals that fueled safe-haven flows. USD/JPY remained in focus after Japan's Finance Minister Katayama warned of readiness to take decisive action on forex, signaling potential intervention if yen weakness persists. On the economic data front, US pending home sales rose 1.4% versus the 1.0% consensus estimate, providing additional support for the dollar. Treasury Secretary Bessent indicated the administration is in no hurry to extend the China trade truce expiring in November, adding uncertainty to trade-related currencies. Major US stock indices closed lower as risk sentiment deteriorated. NATO's warning that alliance military buildup will take years added to the cautious market tone. Traders should monitor Iran developments closely, as military escalation could trigger sharp volatility across USD/JPY, EUR/USD, and commodity-linked pairs in the near term.