Dollar Gains as Middle East Tensions and Rising Oil Prices Support Safe-Haven Demand

The U.S. dollar is heading toward its first weekly gain in three weeks, supported by ongoing geopolitical uncertainty in the Middle East and rising oil prices. Stalled negotiations between the United States and Iran have reduced expectations for a quick resolution, keeping investors cautious and boosting demand for the dollar as a safe-haven currency.

Although Lebanon and Israel agreed to extend their ceasefire for three weeks, tensions remain elevated. Iran’s recent display of military control over the Strait of Hormuz—one of the world’s most critical shipping routes—has added to market concerns. This uncertainty continues to influence global oil prices, with Brent crude rising to $106.30 per barrel and West Texas Intermediate reaching $96.92. The strong correlation between oil prices and the U.S. dollar has helped keep the greenback stable.

The dollar index, which tracks the currency against major peers like the euro and yen, held steady at 98.82 and is on track for a 0.58% weekly increase. The euro remained flat at $1.1683, while the British pound slipped slightly to $1.3464. Analysts note that higher crude prices often support the dollar, reinforcing its strength during periods of global uncertainty.

Meanwhile, the Japanese yen continues to weaken, marking its fifth consecutive day of losses against the dollar at 159.77. Japanese officials have reiterated warnings about potential intervention to stabilize the currency, signaling readiness to act if volatility increases. However, experts suggest significant intervention may only occur if the yen weakens beyond the 161.95 level.

Central banks remain in focus as well. The Bank of Japan is expected to maintain its current policy stance due to economic uncertainty, while the European Central Bank may delay rate hikes until June to manage energy-driven inflation risks.

In the broader currency market, the Australian and New Zealand dollars posted modest gains, while several Asian currencies, including the Philippine peso and Indian rupee, weakened. In the cryptocurrency space, bitcoin rose to $78,420, reflecting continued investor interest in alternative assets amid global instability.