Renewed tensions between the United States and Iran over the Strait of Hormuz have driven notable market movements across currencies and commodities during Asian trading hours on Monday. The US Dollar Index (DXY) rose 0.1% to near 98.30, reflecting increased demand for safe-haven assets amid escalating geopolitical risks [1][2]. The USD/CHF pair climbed 0.13% to approximately 0.7830, as investors sought safety in the US Dollar following Iran's refusal to participate in a second round of talks with the US, citing 'excessive demands, unrealistic expectations, constant shifts in stance, repeated contradictions, and the ongoing naval blockade' [1][4].
The situation intensified after US President Donald Trump accused Tehran of violating ceasefire terms by firing at a French ship and a UK freighter, and later confirmed that the US Navy fired upon and seized an Iranian-flagged cargo ship in the Gulf of Oman after it failed to comply with orders to stop while leaving Hormuz [1][4]. Iran's military described the US actions as a breach of the ceasefire and warned of imminent retaliation, while President Trump threatened to target Iranian infrastructure if tensions escalate further [4]. The Guardian reported Iran's Foreign Ministry labeling the US blockade as an act of aggression and a violation of the ceasefire [2].
Market participants are closely watching the upcoming US Retail Sales data for March, scheduled for release on Tuesday, with consensus estimates pointing to a 1.3% month-on-month increase, up from 0.6% previously [1][2]. Analysts note that a softer-than-expected inflation outcome could weigh on the DXY in the near term [2]. Meanwhile, the AUD/USD pair experienced initial downward pressure due to the stronger USD and geopolitical concerns but rebounded on dip-buying and support from the Reserve Bank of Australia's hawkish outlook [3]. Technical indicators for AUD/USD remain positive, with the MACD in bullish territory and the RSI at 62, suggesting further upside potential [3].
Commodities also reacted to the heightened tensions. Silver (XAG/USD) traded near $80.50 per troy ounce, paring daily losses but remaining under pressure as surging oil prices fueled inflation concerns and raised expectations for additional central bank rate hikes [4]. Iranian authorities briefly indicated a reopening of the Strait of Hormuz on Friday but reversed the decision on Saturday after President Trump refused to lift the blockade on Iranian ports [4].
Analyst Nick Twidale of ATFX Global commented, 'The key is still the Strait of Hormuz for many, and hopes that we could see the U.S. and Iran sit down at the negotiating table before the ceasefire ends now seem remote' [2]. The ceasefire in the Middle East is set to expire on April 22, adding to market uncertainty [2][4].
CONCLUSION
Escalating US-Iran tensions over the Strait of Hormuz have driven safe-haven flows into the US Dollar and impacted major currency pairs and commodities. With the ceasefire deadline approaching and negotiations stalled, markets remain on edge, awaiting further developments and key US economic data for direction.