Dollar Nears 10-Month Peak Amid Middle East Escalation
The US dollar held near a 10-month high on Monday (March 30th) and headed for its biggest monthly gain since July, as conflicting signals from Iran and the United States dimmed hopes for a swift end to the Middle East conflict.
Safe-haven demand rebounded after the war effectively blocked the Strait of Hormuz—a waterway that handles about a fifth of global oil and gas flows—and fueled Brent's sharp rally throughout March.
The dollar index (DXY) was relatively flat at around 100.19, after briefly touching 100.54 in mid-March, its highest since May 2025. Barclays assessed sentiment toward the dollar as near its “maximum bullish” level based on traditional indicators such as growth prospects, interest rate differentials, and market beta measures. Strategically, market participants are holding risk exposure and maintaining volatility hedges while awaiting developments in the conflict.
Among major currencies, the euro held around US$1.15 and was on track to weaken by around 2.5% throughout March—its deepest monthly decline since July—although pressure was helped by market expectations that the ECB could be more proactive. The market shifted from a scenario of a pre-conflict rate cut to pricing in a chance of an ECB rate hike by year-end, which was seen as limiting EUR/USD's downside potential.
The Japanese yen remained in a sensitive zone near 160 per dollar. USD/JPY briefly touched 160.47 (its weakest since July 2024) before reversing, finally settling around 159.65 as Japanese authorities raised the threat of intervention and signaled further weakness could justify a faster rate hike. The yen fell more than 2% throughout March amid concerns about the impact of high oil prices on Japan.
In Asia-Pacific, the Australian dollar weakened to US$0.6851 and headed for a monthly decline of around 3.8% (the deepest since December 2024), while the New Zealand dollar fell to US$0.57275, down around 4.4% over the month. These movements reflect a combination of risk-off pressures, the impact of energy prices, and adjustments in global interest rate expectations.
The market's next focus is on this week's batch of US jobs data. Investors believe the release of jobs data could alter projections for the Federal Reserve's policy path, especially after a weak February jobs report and a month full of geopolitical tensions that could potentially tighten financial conditions.
Source: newsmaker.id
