Dollar edges higher on safe-haven demand amid Middle East tensions: Currency Recap

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Techa Tungateja

The U.S. dollar edged up on Monday, trading at its highest level in nearly a year, as investors navigated heightened geopolitical tensions and uncertainty surrounding the Middle East conflict.

The dollar index (DXY [https://seekingalpha.com/symbol/DXY]), which measures the greenback against a basket of major currencies, was last up 0.43% to $100.58 and remains up about 2.3% for the year to date.

DOLLAR WEEKLY MOVES AND KEY DRIVERS:

Over the past week, the index rose 0.72%, with the U.S. dollar underpinned by safe-haven demand as escalating tensions [https://www.reuters.com/world/asia-pacific/dollar-poised-rally-escalating-middle-east-conflict-spurs-haven-demand-2026-03-23/] between the U.S., Israel, and Iran, along with fading hopes for de-escalation [https://www.reuters.com/world/asia-pacific/dollar-nurses-losses-markets-weigh-trump-delay-iran-strikes-2026-03-24/], boosted demand for defensive assets.

[Chart]
Graphical Representation (SeekingAlpha)

Rising oil [https://www.reuters.com/world/asia-pacific/iran-war-forces-asian-economies-confront-sliding-currencies-surging-oil-2026-03-30/] prices, concerns over a prolonged conflict, and a weaker global risk backdrop further supported the greenback, while expectations for tighter monetary policy [https://www.reuters.com/business/horns-an-inflation-growth-dilemma-fed-chair-powell-speak-harvard-2026-03-30/] added to its strength. Concerns over supply disruptions also intensified, with risks to key shipping routes such as the Strait of Hormuz adding to upward pressure on energy prices [https://www.bbc.com/news/articles/c78n6p09pzno] and reinforcing demand for the dollar.

However, sentiment remained volatile during the period, with intermittent optimism [https://www.reuters.com/world/asia-pacific/dollar-rides-haven-demand-middle-east-talks-ring-hollow-2026-03-27/] around diplomatic progress briefly weighing on the [https://seekingalpha.com/news/4570314-us-dollar-emerges-as-primary-safe-haven-as-fx-markets-turn-very-anxious-strategist] currency, highlighting a market environment shaped by conflicting signals on the trajectory of the conflict and its broader economic impact.

U.S. Treasury yields declined overall, with the 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) fell two basis points to 4.36% over the week, while the 2-year yield (US2Y [https://seekingalpha.com/symbol/US2Y]) slipped eight basis points to 3.84%.

CURRENCY HIGHLIGHTS:

Major currency movements (March 23 to March 29)

Euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD])

-0.58%

Pound Sterling (GBP:USD [https://seekingalpha.com/symbol/GBP:USD])

-0.94%

Japanese Yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD])

-0.63%

Chinese Yuan (CNY:USD [https://seekingalpha.com/symbol/CNY:USD])

-0.39%

Swiss Franc (CHF:USD [https://seekingalpha.com/symbol/CHF:USD])

-1.27%

Australian Dollar (AUD:USD [https://seekingalpha.com/symbol/AUD:USD])

-1.42%

Canadian Dollar (CAD:USD [https://seekingalpha.com/symbol/CAD:USD])

-1.01%

Click to enlarge
The Japanese yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD]) was last up 1.13%,as expectations of further policy normalization from the Bank of Japan lent support, with officials signaling rising underlying inflation and growing price pressures.

However, gains were tempered as the central bank flagged that a weak yen and higher oil prices could amplify inflation risks [https://www.reuters.com/world/asia-pacific/boj-highlights-inflationary-pressure-oil-weak-yen-2026-03-30/], highlighting the economy’s vulnerability to Middle East-driven energy shocks.

The euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD]) was last down 0.46%, pressured by weak regional data after Eurozone business activity missed expectations, highlighting softness in the services sector. The currency also remained under strain as persistent Middle East tensions and oil price uncertainty weighed on European markets and broader risk sentiment.

The British pound (GBP:USD [https://seekingalpha.com/symbol/GBP:USD]) was last down 0.68%, pressured by mixed domestic data after UK inflation held steady while services activity showed signs of weakness.

The currency also remained under strain as ongoing Middle East tensions and oil price uncertainty weighed on broader European market sentiment.

MORE ON US DOLLAR INDEX

* Is The War Really Reaching Its End? Assets Bounce Despite Oil Rally - Market Check [https://seekingalpha.com/article/4887257-is-war-really-reaching-its-end-assets-bounce-despite-oil-rally-market-check]
* Is This A Major Market Top? Energy Shock, Rising Rates, And Weakening Internals [https://seekingalpha.com/article/4887146-is-this-a-major-market-top-energy-shock-rising-rates-and-weakening-internals]
* Global Economy Faces Crossroads As Pentagon Preps Ground Assault [https://seekingalpha.com/article/4887068-global-economy-faces-crossroads-as-pentagon-preps-ground-assault]
* US dollar emerges as primary safe haven as FX markets turn ‘very anxious’ – strategist [https://seekingalpha.com/news/4570314-us-dollar-emerges-as-primary-safe-haven-as-fx-markets-turn-very-anxious-strategist]
* BofA strategist sees weak stocks and bonds, strong dollar into Q2 [https://seekingalpha.com/news/4570018-bofa-strategist-sees-weak-stocks-and-bonds-strong-dollar-into-q2]