The US dollar strengthened against a broad basket of peers on Monday as escalating military conflict in the Middle East reignited fears of supply chain disruptions and higher energy costs.
The greenback’s ascent reflects a dual market dynamic: investors seeking safety amid geopolitical instability while simultaneously hedging against the prospect of renewed inflationary pressure from disrupted oil flows.
Against the Japanese yen, the dollar climbed 0.2% to trade at 162.075.
This move underscores the yen’s vulnerability as a funding currency in risk-off environments, even as the dollar itself serves as the primary safe-haven asset.
The simultaneous rise in the dollar and oil prices creates a complex macroeconomic backdrop, complicating the outlook for central banks that are already navigating sticky inflation data.
The currency market reaction follows reports that Iran has expanded its military strikes on Gulf states, leading to a temporary closure of the Strait of Hormuz.