Dollar Gains Amid Middle East Tensions: Safe Haven Appeal Steady

The U.S. dollar maintained its upward trajectory for a second consecutive session on Tuesday, buoyed by continued instability in the Middle East that has driven investors towards the greenback, viewed as a traditional safe haven.

In response to Iran's closure of the Strait of Hormuz, the dollar surged as the currencies of oil-dependent economies, including Japan and the eurozone, suffered. Though it weakened post-April 7 when a ceasefire was declared, Monday's threats by Donald Trump to end the ceasefire saw it rally again. The U.S. dollar index climbed by 0.36% to 98.30, fluctuating significantly from 97.85 on February 27 to 100.64 in late March.

High crude oil prices continue to underpin the dollar. Thierry Wizman of Macquarie Group suggests the economic impact of U.S. strategies, such as Iran's blockade, could outweigh bombings. With the Federal Reserve expected to maintain high rates and European Central Bank rate hikes anticipated, market attention sharpens on upcoming U.S. inflation data.

(With inputs from agencies.)