USD Strengthens as Strait of Hormuz Closure Fuels Risk-Off Sentiment

The US dollar is gaining safe-haven demand as geopolitical tensions in the Middle East escalate sharply, with Iran's military shutting down passage through the Strait of Hormuz for the second time after a brief reopening. The closure, driven by Tehran's dissatisfaction with the continued US naval blockade, has sent crude oil prices surging and triggered broad risk-off flows across forex markets. USD/JPY and USD/CHF are in focus as traders rotate into traditional safe havens, while commodity-linked currencies such as AUD and CAD face mixed signals — CAD benefiting from rising oil prices while AUD weakens on deteriorating risk appetite. Markets appear to be pricing in the possibility of a diplomatic intervention from former President Trump, whose previous involvement helped briefly reopen the waterway. EUR/USD faces downward pressure as European energy import costs rise on the supply disruption. Traders should monitor oil price developments closely, as sustained elevated crude levels above $100 could reshape central bank inflation expectations and delay anticipated rate cuts across major economies.