USD Faces Pressure as Iran-US Tensions Over Strait of Hormuz Weigh on Markets

The US dollar is trading cautiously as geopolitical tensions between the United States and Iran dominate market sentiment, with Tehran maintaining a de facto closure of the Strait of Hormuz since the weekend. This critical chokepoint handles approximately 20% of global oil supply, and the disruption has pushed crude prices higher, weighing on risk appetite and creating cross-currents for USD pairs. Safe-haven flows have supported JPY and CHF, while commodity-linked currencies such as CAD have found modest support from elevated oil prices. Tehran officials are holding a hard line in their negotiating position ahead of anticipated US-Iran talks, adding uncertainty to the outlook. Markets are caught between cautious optimism that diplomatic progress could ease tensions and the risk of further escalation. Traders should monitor USD/JPY and USD/CHF for safe-haven demand signals, while keeping an eye on USD/CAD as oil price volatility intensifies. Near-term direction hinges on headline developments from diplomatic channels, making position sizing and risk management critical in the current environment.