The dollar index reached a one-week high on Wednesday, rising 0.20% amid heightened safe-haven demand due to escalating tensions in the US-Iran conflict. Iran’s seizure of two ships in the Strait of Hormuz and the UK Navy’s report of gunfire from Iranian forces have intensified market anxieties. However, the dollar’s gains were tempered by a stock market rally that reduced liquidity demand, following President Trump’s announcement of an extended ceasefire with Iran.

The euro fell to a one-week low, down 0.29%, pressured by a significant drop in the Eurozone consumer confidence index and dovish comments from ECB officials regarding interest rates. The German government also downgraded its GDP forecast for 2026, which further undermined the euro. Meanwhile, the yen weakened as rising crude oil prices negatively impacted Japan’s economy, despite better-than-expected trade figures.

Market professionals should note that while safe-haven assets like the dollar and precious metals are currently in demand, the outlook for interest rates remains uncertain, particularly for the euro and yen, which could lead to increased volatility in currency pairs and commodities.

Source: nasdaq.com