USD Strengthens as Oil Plunges on Hormuz Strait Reopening Hopes

US equity futures surged to record highs while crude oil prices tumbled sharply after Treasury Secretary Bessent indicated that the Strait of Hormuz could potentially reopen as early as tomorrow. The geopolitical development carries significant implications for forex markets, particularly for oil-sensitive currency pairs. A reopening of the critical shipping lane, through which approximately 20% of global oil supply transits, would ease supply concerns and reduce the geopolitical risk premium embedded in energy prices. The sharp decline in oil prices is weighing heavily on commodity-linked currencies such as the Canadian dollar (CAD) and Norwegian krone (NOK), while providing relief to net energy importers like Japan (JPY) and the Eurozone (EUR). USD/CAD is expected to face upward pressure as lower oil prices undermine CAD support, while USD/JPY could see selling as risk appetite improves and safe-haven demand fades. Traders should monitor confirmation of the Hormuz developments closely, as any reversal in the geopolitical narrative could trigger rapid repositioning across energy-sensitive pairs and broader risk sentiment.