Dollar Rally Stalls, Market Weighs End of Iran Conflict and Hormuz Risks
The US dollar's rally lost momentum on Tuesday (March 10th) as investors assessed the likelihood of a swift end to the US-Israel war with Iran, despite ongoing military escalation. The dollar index (DXY) fell 0.3% to 98.91 at 3:47 p.m. ET.
US President Donald Trump said the more than week-long conflict could end "very soon," but warned that fighting could escalate if Iran tries to block shipping through the Strait of Hormuz, a vital waterway that handles about a fifth of global oil flows. Meanwhile, the US reportedly launched its heaviest airstrikes against Iran on Tuesday, underscoring the continued high level of uncertainty.
The dollar's recent gains have been fueled by concerns about prolonged disruptions in Hormuz, which could trigger a spike in global inflation. While Trump's comments raised hopes for a de-escalation, the market believes the dollar's rebound will be more sustainable if oil flows currently blocked around Hormuz begin to return to normal.
In major currency markets, EUR/USD fell 0.2% to 1.1609, while GBP/USD weakened 0.1% to 1.3414, as markets remained cautious about the impact of energy and the path of global interest rates.
In Asia, USD/JPY rose 0.2% to 158.07, with the yen still pressured by energy uncertainty, which poses risks for Japan, a major oil importer dependent on the Hormuz route. Revised data showed Japan's fourth-quarter GDP growth was stronger than initially estimated, signaling resilience, but the Bank of Japan's room for rate hikes is considered limited amid market volatility.
Source: Newsmaker.id
