Dollar Surges as Middle East Tensions Escalate Amid Oil Price Recovery
The US Dollar (USD) is gaining strength as investors seek safe-haven assets amid heightened tensions in the Strait of Hormuz. The Euro (EUR/USD) has fallen to around 1.1520, marking its second consecutive day of losses.
The escalated risks in the region have led to a surge in demand for the USD, as market participants weigh the potential impact on global trade and energy prices. Iran's parliament is reviewing a draft proposal that would target US and Israeli shipping, further contributing to the dollar's rally.
US Treasury yields are also rising, adding to the unease, with investors concerned that the Federal Reserve may opt for another interest rate increase next month. However, market-based expectations have moderated, with the probability of a 25-basis-point rate hike in September now standing at 54.5%, down from 63.4% last week.
The Eurozone Retail Sales data has also been disappointing, falling by 0.3% month-on-month in June, against forecasts for a 0.1% increase. This follows May's revised 0.4% gain and represents the weakest performance since July 2024.