The U.S. dollar rose sharply alongside safe-haven currencies like the Japanese yen and Swiss franc following reports that Israel launched airstrikes on Iran. Two U.S. officials confirmed the strikes to Reuters, clarifying that the U.S. had no role in the operation. Explosions were reportedly heard northeast of Tehran.
Currency markets reacted swiftly to the geopolitical tension. The U.S. dollar index, which measures the greenback against six major currencies, gained 0.4% to reach 98.07 in early Asian trading. The dollar fell 0.35% against the yen to 143.00, while the Swiss franc slipped 0.39% to 0.807 per dollar. Risk-sensitive currencies such as the Australian and New Zealand dollars dropped 0.9% each.
Earlier this week, the dollar had weakened amid a tepid investor response to the U.S.-China trade truce and softer-than-expected inflation data, which fueled expectations of deeper interest rate cuts by the Federal Reserve.
Despite today's rally, the dollar remains on track for weekly losses against the yen, euro, and Swiss franc.
The geopolitical shock also impacted commodities. Crude oil prices surged over $4 per barrel, reflecting fears of supply disruption in the oil-rich Middle East. Gold prices rose 0.8%, marking their highest level since early May as investors sought safety.
The swift reversal in global markets underscores the fragile balance between macroeconomic trends and geopolitical risks, particularly in currency and commodity markets. As tensions escalate, investors are flocking to traditional safe havens while reassessing monetary policy expectations.


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