Oil Surge Lifts USD as France Signals Hormuz Mission with Iran Caveats

Geopolitical tensions in the Middle East are intensifying after French President Macron confirmed France's willingness to participate in a Hormuz Strait escort mission, albeit with significant caveats including Iranian coordination and a cessation of hostilities. This follows Trump's earlier hints at French involvement in the operation. The announcement adds complexity to an already volatile geopolitical landscape, as it implies a cooperative rather than adversarial approach toward Iran. Crude oil prices remain elevated on continued attacks on energy infrastructure, supporting commodity-linked currencies like CAD while weighing on oil-importing nations' currencies such as JPY and EUR. The USD is benefiting from safe-haven flows amid the uncertainty. EUR/USD faces headwinds as European energy costs remain a key vulnerability. Traders should monitor developments around Hormuz closely, as any escalation could trigger sharp moves in oil-sensitive pairs including USD/CAD, USD/JPY, and EUR/USD. Near-term, the ambiguity of France's position may keep markets in a risk-off posture, favoring the dollar and Swiss franc.