US dollar jumps to January high as Mideast conflict revives haven demand

The US dollar climbed to its strongest level since January as escalating conflict in the Middle East revived demand for the world’s primary safe haven.

The Dollar Index rose 0.8 per cent to 99.08 as of 9:25 a.m. GMT, extending Monday’s nearly 1 per cent gain — its biggest advance in seven months. Investors sought safety after hostilities between the US and Iran spread across the region, pushing energy prices sharply higher.

The US State Department ordered the departure of non-essential personnel from Bahrain, Iraq, and Jordan, while Israel said it was striking targets in Iran and Lebanon following missile and drone attacks by Tehran-backed Hezbollah.

Strategists at ING said the greenback was benefiting from its relative energy independence, calling the current market dynamic “a tale of the haves and the have-nots” in the face of an energy shock. They see the dollar index targeting the 99.50–100 range if oil and gas prices remain elevated.

The euro slid 0.5 per cent to $1.1627, pressured by Europe’s reliance on imported energy as natural gas prices surged.

“EUR/USD has come under increasing pressure as natural gas prices have soared,” ING stated in a note.

Traders are also watching euro-area flash inflation data due later Tuesday. Annual consumer-price growth is expected at 1.7 per cent in February, with core inflation seen at 2.2 per cent. An upside surprise could temper expectations for European Central Bank easing.

Sterling fell 0.7 per cent to $1.3314. The Swiss franc steadied after the Swiss National Bank signaled a greater willingness to intervene in currency markets following the franc’s rally to a decade high against the euro.

In Asia, the yen traded near 157.5 per dollar after weakening overnight. Japan’s heavy dependence on energy imports has undercut its traditional haven appeal, while Finance Minister Satsuki Katayama said intervention remains an option. China’s yuan slipped 0.3 per cent and the Australian dollar dropped 0.4 per cent, reflecting fragile risk sentiment.

Attribution: Amwal Al Ghad English