Greenback ticks lower amid shifting Middle East tensions, gold volatility: Currency Recap

[Graph showing stock market crash and 401(k) with American One dollar bill in the background]
Alphotographic

The U.S. dollar was down on Monday, as investors assessed easing geopolitical tensions and improving risk sentiment following developments in the Middle East.

The dollar index (DXY [https://seekingalpha.com/symbol/DXY]), which measures the greenback against a basket of major currencies, was last down 0.53% to $99.12 but remains up about 0.8% for the year to date.

DOLLAR WEEKLY MOVES AND KEY DRIVERS:

Over the past week, the index slipped 0.25%, with the U.S. dollar initially supported by heightened geopolitical tensions in the Middle East that drove a surge [https://www.reuters.com/video/watch/idRW543819032026RP1/] in oil prices and raised concerns over supply [https://www.reuters.com/business/energy/oil-falls-us-allies-look-boost-supply-unchoke-strait-hormuz-2026-03-20/] disruptions.

[Chart]
Graphical Representation (SeekingAlpha)

The resulting risk-off sentiment and elevated energy costs underpinned the greenback, as markets also weighed the potential for the inflationary shock to keep central banks cautious [https://www.reuters.com/business/ecb-raises-inflation-forecast-higher-energy-costs-2026-03-19/] on easing.

However, the trend shifted at the start of the week, with the dollar weakening [https://www.reuters.com/world/asia-pacific/dollar-poised-rally-escalating-middle-east-conflict-spurs-haven-demand-2026-03-23/] after U.S. President Donald Trump said he would delay planned strikes on Iranian energy infrastructure, easing fears of further supply disruptions. The announcement triggered a sharp decline in oil prices [https://www.reuters.com/business/energy/oil-prices-rise-after-us-iran-threaten-hit-energy-targets-middle-east-2026-03-22/] and a rebound [https://www.reuters.com/world/china/global-markets-pix-2026-03-22/]in global equities, reducing safe-haven demand for the dollar.

Uncertainty persisted as Iranian officials denied any direct talks [https://www.reuters.com/world/middle-east/iran-threatens-retaliate-against-gulf-energy-water-after-trump-ultimatum-2026-03-23/], leaving investors cautious about the durability of the developments even as broader risk sentiment improved.

Gold also saw sharp moves during the period, falling significantly despite geopolitical tensions before stabilizing [https://seekingalpha.com/news/4567162-gold-slumps-despite-war-exposing-crowded-trade-risks] as markets reacted to shifting risk sentiment.

During the period, global markets were influenced by developments surrounding U.S.-Iran tensions, sharp swings in energy prices, movements in gold [https://www.reuters.com/world/india/risk-off-trade-keeps-gold-volatile-iran-war-spooks-investors-2026-03-23/], and shifts in broader risk sentiment.

U.S. Treasury yields trended higher overall, with the 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) rising 10 basis points to 4.34% over the week, while the 2-year yield (US2Y [https://seekingalpha.com/symbol/US2Y]) rose 17 basis points to 3.86%.

CURRENCY HIGHLIGHTS:

Major currency movements (March 16 to March 22)

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

+0.48%

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

+0.09%

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

-0.16%

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

-0.44%

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

-0.05%

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

-1.20%

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

-0.21%

Click to enlarge
The euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD]) was last up 0.30%, with the currency seeing modest gains as easing oil prices and improving risk sentiment supported European markets toward the end of the week.

Earlier in the period, the euro traded in a choppy range as escalating Middle East tensions, rising oil prices, and mixed regional economic data, including a widening trade deficit and firmer inflation that kept investor sentiment cautious.

The British pound (GBP:USD [https://seekingalpha.com/symbol/GBP:USD]) was last up 0.63%, supported by a rebound in European markets as oil prices eased toward the end of the week.

During the week, the currency saw choppy trading as escalating Middle East tensions and rising energy prices weighed on sentiment, while the Bank of England held interest rates at 3.75% amid growing inflation risks, and U.K. labor market data showed unemployment steady at 5.2%.

The Japanese yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD]) was last up 0.47%, with the currency gaining as markets assessed risks of a potential unwind in yen carry trades amid rising oil price volatility.

The move comes as concerns grew that a spike in oil prices could pressure Japan’s import-heavy economy and prompt authorities to defend the yen, raising the risk of capital repatriation and broader market volatility.

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