USD Strengthens, Oil Surges as US-Iran Conflict Threatens Energy Security

The prolonged US-Iran conflict is driving significant uncertainty across forex markets, with safe-haven flows boosting USD/JPY and USD/CHF while weighing on risk-sensitive currencies. The primary concern centers on energy security in the Persian Gulf region, particularly threats to the Strait of Hormuz, a critical chokepoint for roughly 20% of global oil supply. Crude oil prices have surged on escalating tensions, providing tailwinds for commodity-linked currencies like USD/CAD, where the Canadian dollar benefits from higher energy prices. The Japanese yen and Swiss franc are attracting safe-haven demand as traders seek shelter from geopolitical risk. Gulf nation oil and gas facilities face heightened threat levels, adding a risk premium to energy markets that ripples into forex positioning. The duration of the conflict remains the key unknown, with markets struggling to price in a resolution timeline. Traders should monitor USD pairs closely, as extended conflict could amplify volatility. Key pairs to watch include USD/JPY for safe-haven flows and USD/CAD for oil-related movements.