US Dollar Rises as Oil Volatility and Middle East Tensions Persist

Overall, markets remain driven by geopolitical tensions and oil price volatility. The US dollar is rising again as investors seek safe-haven assets while uncertainty in the Middle East continues. At the same time, the rebound in oil prices is increasing concerns about higher energy costs.

The euro and the pound are under pressure as rising oil prices could weigh on their economies, although the pound is holding up slightly better because the Bank of England is expected to stay less dovish.

Oil prices remain highly volatile. Prices dropped sharply from around $120 to near $76 before rebounding toward the mid-$80s after comments suggesting the conflict could end soon and reports that the International Energy Agency may release large oil reserves to calm supply fears.

However, the Strait of Hormuz remains closed, keeping much of the region’s oil supply restricted. Until that changes, oil prices are likely to stay volatile, supporting safe-haven demand for the US dollar.