Dollar’s Safe-Haven Bid Faces Policy Uncertainty

The U.S. dollar held its ground on Monday as investors sought refuge amid escalating tensions between Israel and Iran, concerned about potential disruptions to Middle East oil flows. Traditional safe-haven currencies like the yen and Swiss franc outperformed, while commodity-linked currencies—including the Australian and New Zealand dollars—managed modest gains.

Brent crude’s roughly 1% rise on renewed conflict concerns reinforced demand for the dollar, though analysts warn that geopolitical drivers alone may not sustain the rally absent clear policy signals. Traders remain wary of overextending long-dollar positions until trade-deal deadlines and tariff uncertainties in Washington become more defined.

Attention now shifts to a packed calendar of central-bank meetings—most notably the Federal Reserve’s policy decision expected to leave rates at 4.25–4.50%. Investors will be dissecting the Fed’s guidance on growth and inflation to gauge the timing of any future easing cycle.

Beyond U.S. policy, markets will also react to monetary decisions from Japan, Britain, Switzerland, Sweden and Norway. In this environment of intersecting geopolitical and economic risks, currency traders anticipate rapid shifts in positioning as fresh information emerges.