USD Strengthens Across EUR/USD, USD/JPY on Middle East Tensions

The US dollar posted broad gains on Friday as escalating Middle East geopolitical tensions triggered a flight to safety, boosting demand for the greenback against major counterparts. EUR/USD came under pressure as rising oil prices threatened to worsen the Eurozone's energy import costs, while USD/JPY advanced as Japan's energy-dependent economy faced similar headwinds. The surge in crude oil prices, driven by conflict-related supply disruption fears, is reigniting inflation concerns globally. Markets are now recalibrating expectations for Federal Reserve monetary policy, with traders pricing in a longer hold on interest rates as elevated energy costs threaten to keep inflation above the Fed's 2% target. The relative insulation of the US economy from oil price shocks, given its domestic production capacity, is providing additional support to the dollar. Near-term, traders should monitor developments in the Middle East alongside upcoming US inflation data for further directional cues. Key support for EUR/USD lies at recent lows, while USD/JPY resistance may be tested if risk aversion intensifies further.