USD Strengthens, Oil Surges as Iran Closes Strait of Hormuz Again

Risk-off sentiment is dominating forex markets as the new trading week opens, with safe-haven currencies gaining ground after Iran announced the closure of the Strait of Hormuz in response to the continued US naval blockade. The breakdown in US-Iran peace talks has reignited geopolitical fears, driving crude oil prices sharply higher and pressuring risk-sensitive currencies such as AUD, NZD, and CAD. The USD and JPY are expected to benefit from safe-haven flows, with USD/JPY likely to see competing dynamics as both currencies attract demand. EUR/USD faces downward pressure as European energy import costs are set to spike given the region's reliance on Middle Eastern oil transiting through the strait. GBP/USD is also vulnerable amid broader risk aversion. Traders should monitor oil price volatility closely, as sustained closure of the Hormuz chokepoint—through which roughly 20% of global oil passes—could trigger significant inflationary pressures and reshape central bank rate expectations. Key support for EUR/USD sits near recent lows, while USD/CHF may test higher resistance levels on dollar and franc strength.