Dollar Strengthens as US-Iran Tensions Escalate
The U.S. dollar strengthened to its highest level in a week during early Asian trading on Monday, posting a broad rally against major currencies. The move came after peace talks between the United States and Iran collapsed, while the U.S. Navy prepared to initiate a blockade of Iranian ports.
Dollar Index Hits Weekly High
The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, climbed by as much as 0.5% to reach 99.187. This marks its strongest level since April 7, reflecting increased demand for the dollar as a safe-haven asset amid rising geopolitical uncertainty.
Major Currencies Weaken Against the Dollar
The euro declined by 0.5% to $1.1667, while the British pound dropped 0.6% to $1.3383. Commodity-linked currencies also faced pressure, with the Australian dollar falling 0.8% to $0.7014 and the New Zealand dollar slipping 0.7% to $0.5798.
US Announces Blockade of Iranian Ports
U.S. President Donald Trump announced on Sunday that the U.S. Navy would begin blockading the Strait of Hormuz following unsuccessful negotiations with Iran aimed at ending the ongoing conflict. The breakdown in talks has put a fragile two-week ceasefire at risk.
The U.S. Central Command confirmed that American forces would begin enforcing the blockade on all maritime traffic entering and leaving Iranian ports starting at 10:00 a.m. ET (14:00 GMT) on Monday.
Risk-Off Sentiment Drives Dollar Demand
According to analysts at Westpac, early trading conditions highlighted a clear risk-off environment, supporting a broad-based rally in the U.S. dollar. Thin liquidity during Asian trading hours further amplified the market’s reaction to the geopolitical developments.
