The dollar index (DXY00) on Monday rose by +0.25%. The dollar moved higher on Monday amid an increase in safe-haven demand after WTI crude oil prices surged more than +4% due to the escalation of tensions in the Middle East. Also, Monday’s better-than-expected US March factory orders report supports the dollar. The dollar also has carryover support from last Friday when President Trump threatened to raise tariffs on European automobile imports to as high as 25%.
Heightened US-Iran tensions are boosting demand for the dollar as a safe-haven. The US and Iran are locked in a battle for control of the Strait of Hormuz, with both sides blocking the waterway to gain leverage during an extended ceasefire. On Monday, the United Arab Emirates (UAE) said an Iranian drone attack caused a fire at the Fujairah oil industry zone. Also, a cargo ship from South Korea was attacked in the Strait of Hormuz, and the UAE also issued a missile threat warning after an oil tanker was struck by Iranian drones outside the Strait of Hormuz. The US Central Command said the US military fought off attacks from Iranian drones, missiles, and armed small boats as it facilitated the passage of two US-flagged vessels through the Strait of Hormuz.
