U.S. dollar seen strengthening as U.S.-Israel strikes intensify
#U.S. dollar #Iran conflict #Geopolitical risk #Safe-haven currency #Energy prices #FX markets #Military escalation
📌 Key Takeaways
- U.S. dollar expected to strengthen due to intensified U.S.-Israel strikes against Iran
- Military escalation leading to higher energy prices and increased risk aversion
- Previous dollar strengthening during Iran conflict in June 2025 proved short-lived due to policy uncertainty
- Analysts suggest current geopolitical tensions may provide more sustained support for the dollar
📖 Full Retelling
The U.S. dollar is expected to gain near-term support following intensified military strikes by the United States and Israel against Iran in early 2026, as financial analysts predict the currency will benefit from heightened geopolitical tensions and rising energy prices. According to Barclays' Head of FX Research Themistoklis Fiotakis, the escalation in Iran adds to recent dollar strength through higher energy prices, with every 10% increase in oil potentially boosting the dollar by 0.5-1%. Washington and Tel Aviv have launched what appears to be a larger-scale operation than previous strikes, with reports indicating significant losses in Iranian leadership, including Supreme Leader Ali Khamenei. President Donald Trump has outlined expansive war aims in a video message, suggesting a campaign that could continue for days or weeks. HSBC strategist David May noted that the greenback should initially benefit from the spike in geopolitical risk, potentially avoiding the short-lived strengthening seen during the June 2025 Iran conflict when the dollar's safe-haven appeal faded quickly due to domestic policy uncertainty. However, May argued that this pattern didn't signal a structural erosion in the dollar's haven status, explaining that geopolitical shocks often produce mixed signals across foreign exchange markets, with the durability of any dollar strength depending heavily on the broader macroeconomic backdrop and evolving risk sentiment.
🏷️ Themes
Geopolitics, Currency Markets, Energy Prices
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try{ var _=i o; . if(!_||_&&typeof _==="object"&&_.expiry Global gas markets face their biggest shock since 2022 on Iran conflict Trump warns Iran as new strikes follow Khamenei’s death Strategists see only temporary market impact from Iran strikes Bitcoin prices fall below $64,000 after U.S./Israel attack on Iran (South Africa Philippines Nigeria) U.S. dollar seen strengthening as U.S.-Israel strikes intensify By Senad Karaahmetovic Author Senad Karaahmetovic Currencies Published 03/01/2026, 04:56 AM U.S. dollar seen strengthening as U.S.-Israel strikes intensify 1 DX -0.17% CL 2.78% Investing.com-- The U.S. dollar is likely to gain near-term support following the latest U.S. and Israeli military action against Iran, even as the broader currency reaction may remain uneven. "The escalation in Iran over the weekend adds to recent dollar tailwinds via higher energy prices - to the tune of 0.5-1% for every 10% increase in oil - and elevated risk aversion," Themistoklis Fiotakis, Head of FX Research at Barclays, said. Get instant FX commentary by upgrading to InvestingPro Washington and Tel Aviv have launched a fresh round of strikes that appears larger in scope than earlier operations, with Iranian leadership reportedly suffering significant losses, including Supreme Leader Ali Khamenei. President Donald Trump outlined sweeping war aims in a video message, signaling a campaign that could extend for days or weeks. HSBC strategist David May said the greenback should initially benefit from the spike in geopolitical risk. “The USD is likely to have an upper hand in the near-term,” May said, noting that the reaction could differ from the market’s behavior during the June 2025 Iran conflict. At that time, the dollar’s safe-haven bounce faded quickly as domestic policy uncertainty weighed on sentiment. That episode prompted debate over whether the currency was losing its traditional defensive appeal. “This would stand in contrast to its performance in June 2025 during the war...
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