USD Strengthens as US-Iran Tensions Escalate, Oil Prices Surge Higher

The US dollar is experiencing safe-haven demand as geopolitical tensions between the US and Iran intensify significantly. US Secretary Rubio has warned that military pressure on Iran will escalate nightly until Tehran agrees to negotiate on Washington's terms. The US has conducted sustained nightly airstrikes on Iranian military infrastructure, while Iran has retaliated with missile and drone attacks against US-linked assets across the Middle East. Iran's threats to disrupt shipping through the Strait of Hormuz and Houthi activity in the Red Sea are driving crude oil prices sharply higher, adding inflationary pressure to the global economy. USD/JPY and USD/CHF are seeing notable volatility as traders rotate between risk-off safe havens. The disruption to key shipping lanes threatens global trade flows, potentially weighing on commodity-linked currencies like AUD and CAD through supply chain uncertainty. Traders should monitor oil price action closely, as sustained elevated crude prices could alter central bank rate expectations globally. Key support for EUR/USD sits near recent lows as dollar demand persists amid the escalating conflict.