Dollar Strengthens, Forex Market Enters Risk-Off Mode
The US dollar index (DXY) strengthened in the European session on Tuesday (March 3rd) as demand for safe havens increased amid the escalating Middle East conflict. The DXY was recorded at around 98.97, up around +0.59% on the day, reinforcing the dollar's dominance as market participants reduced risk exposure.
The most obvious pressure was seen on GBP/USD, which weakened to around 1.3336, down around -0.54%. The pound's weakness reflected a combination of a stronger dollar and investors' shift to defensive assets, amid concerns about energy and rising global inflation.
Meanwhile, EUR/USD slumped to its lowest level since mid-January. In the European session, the euro traded around 1.1622–1.1662, with daily losses of around -0.21% to -0.56%, as markets assessed the risk of energy shocks that could depress the region's economic recovery and complicate the path of inflation.
In Asia and continuing into Europe, USD/JPY held high around 157.53, strengthening slightly by around +0.08%. The yen is again sensitive to surging energy costs (Japan is a net importer), while the dollar's strength remains supported by repricing US interest rate expectations and safe-haven flows.
Among other defensive currencies, USD/CHF strengthened to around 0.7843, up around +0.64%, indicating the dollar is currently preferred by the market over traditional havens. Meanwhile, AUD/USD moved relatively stable at 0.7091, down slightly by around -0.04%, as the Australian dollar was held back by risk-off sentiment despite Australia's advantage as an energy exporter.
Source: Newsmaker.id
