USD Strengthens as Iran Tensions Escalate, Oil Volatility Impacts FX

The US dollar gained 0.4% against major currencies Monday as geopolitical tensions between Iran and Israel intensified, with Iranian officials warning of prolonged conflict readiness. WTI crude oil initially spiked to $75.20 before retreating 1.2% as markets digested the risk of supply disruptions versus actual economic impact. EUR/USD declined 45 pips to 1.0805, while USD/JPY advanced to 157.85 as safe-haven flows favored the dollar over traditional alternatives. Risk-sensitive pairs like AUD/USD and NZD/USD fell 0.6% and 0.7% respectively. European equity markets declined 0.8% while US futures recovered from early losses. Technical indicators show USD index testing resistance at 106.50, with momentum indicators suggesting further upside if geopolitical concerns persist. Traders are monitoring oil price movements closely, as sustained elevation above $80 could trigger inflation concerns and influence central bank policy decisions globally.