The ongoing US-Iran standoff over the Strait of Hormuz has intensified, with Iran closing the strategic waterway after the US Navy intercepted and seized an Iranian-flagged cargo ship in the Gulf of Oman, which Iran considers a breach of the ceasefire agreement. The closure follows a brief reopening after a 10-day truce between Israel and Hezbollah, and US President Donald Trump has stated that the naval blockade of Iranian ports will continue until a peace deal is reached. Iranian officials have refused to participate in further peace talks while the blockade remains, dampening hopes for an agreement before the ceasefire ends on April 22 [2][3].
This geopolitical tension has triggered a wave of global risk-aversion, boosting safe-haven demand for the US Dollar (USD). The Greenback has strengthened against major peers, including the Euro and Pound Sterling, as markets price in a Federal Reserve 'higher-for-longer' stance amid persistent inflation and Middle East tensions. The EUR/USD pair trades just above mid-1.1700s, having stalled Friday's retracement slide from the 1.1850 zone, while GBP/USD remains weaker near 1.3500 after opening at a gap down [1][2].
Technical analysis for EUR/USD shows the pair hovering above the 23.6% Fibonacci retracement of the recent upswing from the late March low, capped by the 100-hour EMA at 1.1770. The RSI around 43 and a slightly negative MACD suggest a consolidative bias with a modest downside tilt. Initial support is at 1.1754, with further cushions at 1.1695 and 1.1648 if selling pressure extends. A break above 1.1770 could open the way toward the cycle high at 1.1849 [1]. For GBP/USD, the Pound may find support as renewed Strait of Hormuz tensions lift oil prices, reviving inflation concerns and expectations of further Bank of England rate hikes. BoE Deputy Governor Sarah Breeden warned that the Middle East conflict has increased the risk of overlapping market stresses [2].
Gold (XAU/USD) struggles to extend its recovery beyond the 100-hour SMA, capped by rising US Treasury bond yields and fading upside momentum. The commodity trades up to the $4,815 region but remains vulnerable below the 100-hour SMA, with RSI around 44 and negative MACD readings. The lack of follow-through buying warrants caution before positioning for a resumption of gold's recent move up from the March swing low around $4,100. The CME Group's FedWatch Tool indicates a roughly 40% chance of a Fed rate cut by year-end, which limits meaningful USD appreciation and acts as a tailwind for gold [3].
Traders are also watching Tuesday's US Retail Sales data, expected to rise 1.3% MoM in March after 0.6% in February, which could further influence USD and commodity movements [2].
CONCLUSION
The US-Iran standoff over the Strait of Hormuz has heightened geopolitical risks, fueling safe-haven demand for the US Dollar and lifting oil prices. Major currency pairs like EUR/USD and GBP/USD remain under pressure, while gold struggles to extend gains amid rising US bond yields. Market participants are closely monitoring developments in the Middle East and upcoming US economic data for further direction.