The US dollar held near a two-month high as renewed Gulf hostilities lifted oil prices and dampened global risk appetite, with analysts noting that safe-haven demand continues to underpin the greenback amid escalating geopolitical tensions, according to market commentary.
FX strategist Sim Moh Siong at OCBC said the dollar’s safe-haven status appears to be strengthening again as oil prices and global yields rebound on heightened geopolitical risks. He added that there is no strong case for a bearish US dollar at present, with expectations for a firm but rangebound currency outlook.
The dollar index, which tracks the greenback against a basket of major currencies, was slightly higher at 99.47 after previously hitting its strongest level since early April. The euro and British pound remained largely flat at $1.1604 and $1.3424 respectively, while commodity-linked currencies such as the Australian dollar and New Zealand dollar traded mixed.
Market sentiment was also shaped by renewed tensions in the Middle East, including reported Iranian attacks on Kuwait and US military strikes near the Strait of Hormuz, which disrupted a fragile ceasefire and revived concerns over global energy supply routes.
The Japanese yen hovered near the key 160 per US dollar level, a threshold widely viewed by traders as a potential trigger for intervention by Japanese authorities. The currency last traded at 159.91, with analysts warning that volatility may persist as markets test policy tolerance levels.
Bank of Japan Governor Kazuo Ueda’s recent comments suggesting a potential rate hike further added to currency uncertainty, with some economists interpreting the tone as increasingly hawkish amid inflation risks and concerns over being behind the curve.
