Oil Price Surge Pressures Risk FX as Middle East Attacks Disrupt Crude Supply

Rising crude oil prices are weighing heavily on global market sentiment and risk-sensitive currencies, as escalating attacks on energy infrastructure in the Middle East disrupt supply routes through the critical Strait of Hormuz. The surge in oil prices is strengthening commodity-linked safe havens while pressuring import-dependent economies, creating a clear risk-off dynamic across forex markets. The USD is finding support as a traditional safe-haven currency, while commodity importers such as JPY-denominated pairs face additional headwinds from rising energy costs. CAD is seeing mixed flows, benefiting from higher oil prices as a petro-currency but facing drag from broader risk aversion. Traders should monitor developments around the Strait of Hormuz closely, as any further escalation could drive oil above recent highs and amplify risk-off positioning. Near-term, USD strength is likely to persist against risk currencies such as AUD and NZD, while EUR/USD may remain under pressure ahead of upcoming central bank decisions. Volatility is expected to remain elevated across major pairs.