Dollar firms on safe-haven demand amid escalating U.S.-Iran tensions: Currency Recap

ardasavasciogullari

The U.S. dollar edged up on Monday, as investors turned cautious following renewed geopolitical tensions and a shift back toward safe-haven demand after the collapse of U.S.-Iran peace talks.

The dollar index (DXY [https://seekingalpha.com/symbol/DXY]), which measures the greenback against a basket of major currencies, was last up 0.14% to $98.79 but remains up about 0.71% for the year to date.

DOLLAR WEEKLY MOVES AND KEY DRIVERS:

Over the past week, the U.S. dollar’s moves were driven by a clear sequence of geopolitical developments tied to the U.S.-Iran conflict. Early in the period, the greenback came under pressure as a tentative ceasefire [https://www.reuters.com/world/india/gold-set-third-weekly-gain-us-rate-outlook-offsets-dollar-strength-2026-04-10/] between Washington and Tehran triggered a relief rally in risk assets, prompting investors to unwind safe-haven positions. This weakness extended as optimism around planned peace talks and expectations of easing disruptions to energy flows supported risk-sensitive currencies, putting the dollar on track for its worst [https://www.reuters.com/world/china/dollar-steadies-fragile-us-iran-ceasefire-weighs-markets-2026-04-09/] weekly performance since January.

However, sentiment remained fragile, and as the week progressed, intermittent doubts over the durability of the truce [https://www.reuters.com/world/india/gold-set-third-weekly-gain-us-rate-outlook-offsets-dollar-strength-2026-04-10/] limited downside in the dollar. Toward the end of the period, the trend reversed sharply, as the collapse of peace talks and renewed threats to energy [https://www.reuters.com/business/global-markets-dollar-urgent-2026-04-12/] supply routes, including a potential U.S. blockade [https://www.investing.com/news/commodities-news/oil-prices-jump-above-100barrel-after-trump-orders-hormuz-blockade-4609119] of Iranian ports, drove oil prices higher, reignited inflation [https://seekingalpha.com/news/4574120-tariffs-drove-the-bulk-of-core-goods-inflation-added-08-to-core-pce-a-fed-study-finds] concerns, and triggered a fresh flight to safety, lifting the dollar.

The rebound in the dollar was further supported by shifting expectations around the global interest [https://www.reuters.com/business/fed-rate-cut-bets-revived-bit-by-iran-war-ceasefire-2026-04-08/] rate outlook, as rising energy prices and persistent inflation pressures reduced the likelihood of near-term policy easing by major central banks.

Risk aversion intensified toward the latter part of the week as diplomatic efforts faltered and tensions escalated, including renewed threats to key energy shipping routes such as the Strait of Hormuz. The shift toward a risk-off environment lifted demand for the dollar as a safe-haven currency, while equities came under pressure and energy prices moved [https://seekingalpha.com/news/4573583-asia-markets-sink-on-skepticism-over-us-iran-truce-irans-grip-on-hormuz-sends-oil-higher] higher.

During the period, global markets were influenced by developments in the U.S.-Iran conflict, sharp swings in oil prices [https://www.reuters.com/world/china/global-markets-wrapup-1-2026-04-12/], evolving inflation expectations, and broader shifts in risk sentiment.

U.S. Treasury yields were trading low overall, with the 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]) falling four basis points to 4.31%, while the 2-year yield (US2Y [https://seekingalpha.com/symbol/US2Y#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]) declined eight basis points to 3.79%.

CURRENCY HIGHLIGHTS:

Major currency movements (April 06 to April 12)

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

+1.33%

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

+1.35%

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

+0.16%

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

+0.72%

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

+0.95%

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

+1.83%

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

+0.44%

Click to enlarge
The euro (EUR:USD [https://seekingalpha.com/symbol/EUR:USD]) was last up 0.09%, with gains supported earlier by optimism around a potential ceasefire that lifted European markets.

However, the currency pared advances as sentiment turned cautious, with European indexes declining amid renewed geopolitical tensions, rising energy prices, and lingering macroeconomic jitters.

The Australian dollar (AUD:USD [https://seekingalpha.com/symbol/AUD:USD]) was last up 0.34%, reflecting earlier risk-on sentiment that supported growth-linked currencies. However, gains were limited as the currency came under pressure amid renewed geopolitical tensions, with its slide signaling broader risk aversion and potential weakness in U.S. equities.

The Japanese yen (JPY:USD [https://seekingalpha.com/symbol/JPY:USD]) was last down 0.14%, weakening even as geopolitical tensions escalated, suggesting limited safe-haven demand amid broader dollar strength.

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