Dollar Surges on Escalating US-Iran Tensions, Euro Faces Weakening Fate
The dollar has surged to its highest level in seven weeks due to safe-haven demand triggered by escalating military conflict between the US and Iran. Oil prices rose nearly 1% as Brent crude futures climbed to $95.52 per barrel, while West Texas Intermediate gained 0.89% to $91.02.
The dollar-buying momentum was reinforced by rising U.S. Treasury yields, which hit their highest since November 2023 at 4.812%. The 10-year yield has been a key driver of safe-haven demand, encouraging investors to seek refuge in the dollar while weighing on risk assets like equities.
George Brown, senior economist at Schroders, expects the euro to weaken further due to diverging monetary policy paths between the Federal Reserve and the European Central Bank. He forecasts the euro falling to $1.10 by year-end.