The core event across all three sources is the surge in geopolitical tensions in the Middle East, particularly involving Iran and the potential closure of the Strait of Hormuz, which has led to significant volatility in oil prices and impacted global currency markets. According to [1], the AUD/USD pair retreated to around 0.7060 during the early European session on Friday, pulling back from near three-year highs as safe-haven flows boosted the US Dollar. US President Donald Trump emphasized the importance of preventing Iran from acquiring nuclear weapons, while Iran's new supreme leader, Mojtaba Khamenei, stated that Tehran would seek to keep the Strait of Hormuz effectively closed and might open other fronts if the US and Israel continue their attacks [1].
In the Indian market, USD/INR depreciated after reaching an all-time high of 92.90 in the previous session, trading around 92.70 on Friday as the Reserve Bank of India likely intervened to support the rupee amid oil price concerns [2]. Oil prices, specifically WTI, edged lower to near $94.50 per barrel after surging more than 9% in the previous session, partly due to Australia's decision to release up to 762 million litres of fuel from reserves to address supply disruptions linked to the Iran conflict [2]. However, ongoing shipping disruptions through the Strait of Hormuz and Khamenei's remarks about using the strait as a 'tool to pressure the enemy' suggest oil prices may remain elevated [2].
The USD/CHF pair advanced to 0.7870, nearing its monthly peak, as inflation worries and the anticipation of the US Personal Consumption Expenditures (PCE) Price Index supported the US Dollar [3]. The USD Index (DXY) approached a three-month high, reflecting broad-based USD strength amid expectations that the Federal Reserve will keep interest rates unchanged at the upcoming meeting, with the current federal funds rate at 3.50%-3.75% [2][3]. Market expectations have shifted toward only one 25-basis-point Fed rate cut in 2026, likely in December [3].
Key data points include the February US Consumer Price Index (CPI), which rose 0.3% MoM and 2.4% YoY, with core CPI up 0.2% MoM and 2.5% YoY, largely in line with expectations [2]. The US Dollar has shown strength against most major currencies this month, including a 0.67% gain against the Australian Dollar and a 1.67% gain against the Swiss Franc [3].
Forward-looking statements from analysts suggest that the Fed may keep policy steady in the near term, as recent inflation data do not yet fully reflect the impact of the Iran-driven oil price surge [2][3]. In Australia, aggressive bets on a Reserve Bank of Australia rate hike next week (23 of 30 economists expect a move to 4.10% on March 17) may help limit AUD losses, with the median forecast for the cash rate at 4.35% by end-2026 [1].
CONCLUSION
Escalating Middle East tensions and the threat to the Strait of Hormuz have driven oil price volatility and strengthened the US Dollar across major currency pairs. Central banks, including the Fed and RBA, are expected to maintain or adjust policy in response to inflation and geopolitical risks. Market sentiment remains cautious, with high impact expected across FX and commodity markets as the situation develops.