Dollar Surges as Geopolitical Tensions Escalate
The U.S. dollar strengthened sharply on Thursday following comments from U.S. President Donald Trump on the Iran conflict. His remarks reduced expectations of a quick resolution, prompting investors to shift toward safe-haven assets. At the same time, oil prices surged while global stock markets declined.
Trump Signals Further Military Action
In a televised address, Trump indicated that more aggressive strikes on Iran could take place within the next two to three weeks. However, he did not provide a clear timeline for reopening the Strait of Hormuz or ending the ongoing conflict, adding to uncertainty in global markets.
In response, Iran’s military warned of “more destructive and broader” retaliatory actions against the United States and Israel, further heightening geopolitical risks.
Safe-Haven Demand Boosts the Dollar
As tensions intensified, investors moved away from riskier assets such as equities and turned to the U.S. dollar. This shift led to declines in major currencies including the euro, yen, and British pound.
The dollar index, which tracks the greenback against a basket of currencies, rose 0.68% to 100.24. The move puts the dollar on track for its strongest daily performance since mid-March.
Markets Reverse Earlier Optimism
The latest rally in the dollar erased most of the losses seen earlier in the week, when markets had briefly hoped for a de-escalation in the Iran conflict. The renewed uncertainty now positions the dollar for another weekly gain.
Meanwhile, global equities came under pressure, and oil prices surged sharply. Brent crude climbed nearly 8%, reaching $109.10 per barrel, as fears of prolonged supply disruptions intensified.
Currency Markets React to Rising Oil Prices
Higher oil prices continued to weigh on global currencies during European trading. The euro fell 0.66% to $1.1513, while the British pound dropped 0.88% to $1.319, reversing part of their recent gains.
The Australian dollar, often viewed as a proxy for global economic growth, declined 0.95% to $0.6863. At the same time, the Japanese yen weakened 0.6% to 159.72 per dollar, approaching the critical 160 level that could trigger intervention by Japanese authorities.
Inflation Concerns and Bond Market Reaction
Trump’s remarks also pushed U.S. Treasury yields higher, as investors grew concerned that rising oil prices could fuel inflation and limit the Federal Reserve’s ability to cut interest rates.
Focus Shifts to U.S. Jobs Data
Attention now turns to the upcoming U.S. non-farm payrolls report. Economists expect an increase of around 60,000 jobs for March. A weaker-than-expected result could increase concerns about stagflation and add further volatility to financial markets.
With markets already on edge, analysts warn that trading conditions could remain highly volatile, particularly heading into the Easter holiday period.
