USD Gains on Iran-Israel Tensions; Oil Supply Risks Mount

Safe-haven demand has pushed the US dollar higher across major pairs as Iran's Supreme Leader threatened retaliation against Israel, stoking fears of Middle East escalation. The DXY index climbed 0.4% to 106.50 as traders assessed potential disruptions to oil supply through the Strait of Hormuz, where 20% of global oil passes. WTI crude surged 2.8% to $82.40/barrel on supply concerns. Currency markets are pricing in heightened geopolitical risk, with USD/JPY rising despite typical yen safe-haven flows, currently trading at 155.80. The primary concern centers on potential direct US military involvement and subsequent oil price shocks that could reignite inflation pressures. Technical resistance for DXY sits at 107.00, with support at 106.00. Traders should monitor developments closely as any escalation could trigger sharp risk-off moves benefiting the dollar and yen while pressuring commodity currencies.