USD Strengthens as Middle East Tensions and AI Selloff Fuel Risk Aversion

The US dollar gained broadly at the start of the week as escalating geopolitical tensions in the Middle East and a sharp selloff in artificial intelligence-related equities drove investors toward safe-haven assets. Risk sentiment deteriorated significantly on Monday, with equity markets sliding as traders reassessed exposure to high-growth tech sectors amid concerns that the AI investment boom may be overextended. The combination of war fears and fading speculative enthusiasm created a potent risk-off environment, benefiting traditional safe havens including the dollar, Japanese yen, and Swiss franc. Commodity-linked currencies such as the Australian and Canadian dollars came under pressure as risk appetite evaporated, while EUR/USD and GBP/USD both weakened against the greenback. Oil prices saw mixed action, with geopolitical supply concerns offset by broader demand worries. Traders should monitor developments in the Middle East closely, as further escalation could amplify safe-haven flows. Near-term, the US Dollar Index may test higher resistance levels if risk aversion persists through the week.