Dollar Supported by War Risks
The US dollar strengthened slightly in trading on Monday (July 20th), supported by increased demand for safe-haven assets after the conflict between the United States and Iran escalated. Investors tended to seek refuge in dollar assets amidst still-high geopolitical risks.
The dollar's strengthening occurred when Brent oil prices briefly rose to around US$90 per barrel. The oil surge was triggered by the US strikes on Iran for the ninth consecutive night, following the deaths of US military personnel in Jordan.
The US dollar index held steady around 100.76. In addition to the Middle East conflict, sentiment toward the dollar was also supported by expectations that US interest rates could remain high for longer if inflationary pressures re-escalate due to rising energy prices.
From a global trade perspective, US-China tensions have again become a concern after President Donald Trump accused China of interfering in the 2020 US election. This concern weighed on market sentiment, especially amidst still-fragile trade relations following last year's tariff war.
However, the dollar's gains began to be limited after US Treasury yields weakened, following softer US inflation data last week. Oil prices also briefly reversed after Iran signaled that negotiations with the US were still possible based on national interests.
As a result, the US dollar still has the potential to be supported by safe-haven sentiment as long as the US-Iran conflict continues to subside. However, if oil prices continue to fall and the prospects for diplomacy strengthen, the dollar's strength could be restrained. Meanwhile, gold has the potential for limited movement, oil remains volatile, and the euro and pound could gain momentum if pressure on the greenback weakens. (arl)
Source: Newsmaker.id
