USD Strengthens as Middle East Tensions and Rising Oil Prices Weigh on Markets

The US dollar benefited from safe-haven flows this week as escalating Middle East conflict and surging oil prices drove risk-off sentiment across global markets. Stocks ended the week lower, reflecting investor anxiety over geopolitical instability, while the greenback gained ground against risk-sensitive currencies. Rising crude oil prices, a direct consequence of supply disruption fears tied to the conflict, placed particular pressure on oil-importing nations' currencies, notably USD/JPY and EUR/USD. The Japanese yen also saw intermittent safe-haven demand, though dollar strength largely dominated. USD/CAD saw notable volatility as higher oil prices supported the Canadian dollar, partially offsetting broader USD strength. For commodity-linked pairs such as AUD/USD and NZD/USD, the risk-off environment created headwinds despite firmer commodity prices. Traders should monitor developments in the Middle East closely, as further escalation could amplify USD demand. Near-term, key support for EUR/USD sits near recent weekly lows, while resistance for the DXY index lies at the week's highs. Risk management remains critical amid elevated volatility.