USD Strengthens on Risk-Off Mood as US-Iran Tensions Escalate

Safe-haven currencies are gaining traction to start the new week as geopolitical tensions between the US and Iran intensify, driving a softer risk mood across forex markets. US-Iran nuclear talks collapsed over the weekend after both sides failed to reach an agreement, with Iran maintaining control over the Strait of Hormuz — a critical chokepoint for global oil supply. The US has responded by announcing a blockade on Iranian ports set to begin later today, marking a significant escalation in military posturing in the region. The breakdown in negotiations makes a return to the table unlikely in the near term, keeping risk sentiment suppressed. The Japanese yen and Swiss franc are benefiting from safe-haven flows, while commodity-linked currencies such as AUD and NZD face headwinds. Oil prices are expected to remain elevated given the Strait of Hormuz tensions, which could further support CAD. Traders should monitor headlines closely as any further military escalation could trigger sharp moves in risk-sensitive pairs and boost USD demand.