Dollar's Safe-Haven Status Boosted Amid Middle East Tensions and Central Bank Moves
As tension in the Middle East escalates, the U.S. dollar strengthens, regaining its safe-haven status. Central bank decisions, including unexpected rate cuts from Norway and comments from Fed Chair Powell on tariffs, influence market dynamics. Meanwhile, the market anticipates possible U.S. involvement in the conflict alongside implications for global economic outlook.
The dollar gained traction on Thursday as geopolitical tensions in the Middle East heightened market concerns. Central bank activity added to the financial landscape's complexity, with Norway's unexpected rate cut surprising traders. The dollar's safe-haven appeal re-emerged, signaling shifts in investor sentiment.
Iran and Israel furthered their military actions, now in their seventh day, stirring speculation over U.S. intervention. President Donald Trump's ambiguous stance on possible U.S. involvement left global observers on edge. Central banks, including the Federal Reserve and Bank of England, opted to hold rates steady amid global uncertainty.
Despite initial losses, the pound regained ground, while the Swiss franc strengthened following a rate cut. Meanwhile, the euro and dollar rallied against the Norwegian crown. Analysts project continued dollar strength if the Middle East situation intensifies, with U.S. market closures for Juneteenth affecting trading volumes.
(With inputs from agencies.)
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