USD Strengthens as US-Iran Tensions Lift Oil, Treasury Yields

The US dollar remains supported amid escalating US-Iran military tensions, with rising oil prices and Treasury yields providing dual tailwinds for the greenback heading into the new trading week. Brent crude continues to trade near one-month highs as the conflict enters its 10th consecutive night of exchanges, with Goldman Sachs warning that prices could surge above $120/bbl if the Strait of Hormuz faces sustained disruption. President Trump has warned that Iran will pay 'many times over' for the killing of American soldiers, keeping risk sentiment fragile across global markets. Safe-haven flows are bolstering the dollar and Japanese yen, while commodity-linked currencies face mixed dynamics—CAD potentially benefiting from oil strength while risk-sensitive AUD and NZD face headwinds. Elevated oil prices also feed into inflation expectations, pushing Treasury yields higher and reinforcing hawkish Fed pricing. Traders should monitor developments closely, as any escalation toward full-scale war or a ceasefire decision from Trump could trigger sharp volatility across major pairs, particularly USD/JPY and oil-sensitive crosses.