Iran Conflict Drives Dollar Surge as Oil Tops $110, Rattling Forex Markets

The escalating Iran conflict sent shockwaves through global currency markets on Monday, propelling the US dollar to a three-month high against the euro as oil prices skyrocketed past $110 per barrel .

The greenback surged 0.8% to $1.1525 per euro, its strongest level since November, and rose nearly 0.4% against the yen to 158.48 . Sterling and commodity-linked currencies like the Australian and New Zealand dollars tumbled more than 0.6% .

"The dollar benefits from its twin status as a safe-haven and energy exporter," said Joe Capurso of Commonwealth Bank of Australia . Analysts note that US crude futures exceeding $108 per barrel threatens global growth while reinforcing the dollar's strength .

The yen weakened as Japan imports approximately 95% of its crude oil, with 70% passing through the Strait of Hormuz . The Indian rupee sank to an all-time low near 92.80 per dollar, reflecting the nation's heavy reliance on energy imports .

Risk sentiment deteriorated sharply, with S&P 500 futures dropping 1.6% . Investors fled to the dollar as traditional havens like gold faltered amid broad selling . Analysts expect further dollar strength as the conflict shows no signs of de-escalation .