The U.S. dollar climbed Monday as escalating strikes between the U.S., Israel, and Iran triggered safe-haven demand and pushed oil prices higher.
Investors are monitoring tensions around the Strait of Hormuz after retaliatory Iranian attacks disrupted critical global shipping routes.
A sustained oil surge could severely impact Japan and the euro zone, both major crude importers, while the U.S. remains relatively insulated as a net exporter.
Analysts at Barclays estimate the dollar could gain 0.5% to 1% for every 10% rise in oil, amplifying recent bullish momentum.
The dollar index rose 0.74% to 98.37, its highest level since January, reflecting heightened risk aversion across global markets.
The euro fell 0.80% to $1.1721, pressured by inflation risks as higher energy costs threaten consumer purchasing power in the euro area.
The yen weakened to 157 per dollar despite earlier gains, as markets weighed energy shocks against the Bank of Japan’s tightening signals.
Risk-sensitive currencies slid, with the Australian dollar tumbling and China’s offshore yuan weakening as Beijing adjusted its daily fixing to curb volatility.
