Dollar Edges Higher as Markets Await Iran’s Response to US Strikes

The US dollar gained slightly on Monday as global markets responded cautiously to heightened geopolitical tensions in the Middle East following American airstrikes on Iranian nuclear facilities, CNBC reports.

While the move reflected a mild shift toward safer assets, overall market reaction remained restrained, signaling that investors are closely monitoring Iran’s next steps.

The most pronounced reaction was seen in the oil market, where prices surged to a five-month high. Global equities, meanwhile, fell slightly in the initial response to the weekend strikes. Currency markets also reflected a moderate flight to safety, with the dollar advancing broadly against major peers.

The greenback rose 0.25% against the Japanese yen to 146.415, reaching a one-month high earlier in the session. The euro declined 0.33% to $1.1484, and the Australian dollar, often viewed as a proxy for market risk, weakened 0.2% to $0.6437—near its lowest level in over three weeks.

The US dollar index, which measures the currency against a basket of six major rivals, rose 0.12% to 99.037. The British pound fell 0.25% to $1.34175, while the New Zealand dollar slipped 0.24% to $0.5952.

Currency strategist Carol Kong of Commonwealth Bank of Australia noted that market participants are in a “wait-and-see” mode.

“The risks are clearly skewed to further upside in safe haven currencies if the parties escalate the conflict,” she said, highlighting the ongoing potential for volatility.

Tensions rose sharply after the US reportedly deployed 30,000-pound bunker-buster bombs near Iran’s Fordow nuclear facility. In response, Iran pledged to defend itself and signaled its intent to escalate by approving legislation that could close the Strait of Hormuz—a key global oil transit route through which nearly 25% of the world’s oil passes.

Despite the geopolitical strain, some analysts said the market reaction suggests investors currently view the situation as a contained incident rather than the onset of a broader conflict.

“The muted haven flows suggest investors are still assuming this is a one-off escalation,” said Charu Chanana, chief investment strategist at Saxo.

Still, the dollar’s modest gains stand in contrast to its broader performance this year. The currency has fallen 8.6% in 2025 amid uncertainty related to the return of President Donald Trump and renewed trade policy concerns, particularly over tariffs and their potential impact on US economic growth.

In the digital asset space, cryptocurrencies showed signs of recovery. Bitcoin rose 1.3% in early Monday trading after a 4% decline on Sunday, while Ether gained 2.3%, rebounding from a 9% loss the day before.