{"id":52373,"date":"2026-03-03T10:48:28","date_gmt":"2026-03-03T02:48:28","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=43234"},"modified":"2026-03-03T10:48:28","modified_gmt":"2026-03-03T02:48:28","slug":"usdx-holds-gains-as-middle-east-tensions-lift-safe-haven-demand","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/usdx-holds-gains-as-middle-east-tensions-lift-safe-haven-demand\/","title":{"rendered":"USDX Holds Gains as Middle East Tensions Lift Safe-Haven Demand"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/05\/USD8-1024x573.webp\" alt=\"\" class=\"wp-image-43236\"\/><\/figure>\n\n\n\n<p><strong>Key Takeaways<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The US dollar index (USDX) stabilised near 98.5 after rising nearly 1% in the previous session.<\/li>\n\n\n\n<li>Escalating US-Israel military activity against Iran boosted safe-haven demand.<\/li>\n\n\n\n<li>Rising energy prices are reinforcing inflation concerns and pushing back Fed rate-cut expectations.<\/li>\n\n\n\n<li>Markets now expect the next Fed cut in September rather than July.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Dollar Supported by Global Risk Premium<\/h2>\n\n\n\n<p>The US dollar index hovered around 98.5 after surging nearly 1% in the prior session, as investors sought safety amid intensifying Middle East tensions.<\/p>\n\n\n\n<p>Reports that Washington may significantly ramp up military action against Iran by targeting missile production, drone programmes and naval assets have reinforced risk aversion across markets.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Prediction markets have spent the past year courting Wall Street money and Washington legitimacy with an ambitious pitch: markets that let people bet on real-world events can produce better, faster information than any alternative. <a href=\"https:\/\/t.co\/xk74qzq8gX\">https:\/\/t.co\/xk74qzq8gX<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2028252189601194211?ref_src=twsrc%5Etfw\">March 1, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>In periods of geopolitical stress, the dollar typically benefits from its reserve currency status and the depth of US Treasury markets. That dynamic was evident as capital rotated defensively.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Energy Shock Complicates Rate-Cut Outlook<\/h2>\n\n\n\n<p>The dollar\u2019s strength is not solely a safe-haven reaction.<\/p>\n\n\n\n<p>Rising oil prices, driven by escalating conflict, have renewed inflation concerns. Higher energy costs feed into transportation, manufacturing and consumer pricing channels, potentially slowing progress toward the Federal Reserve\u2019s inflation target.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">The war in Iran has pushed the world to the brink of an energy crisis, but oil traders are keeping calm \u2014 for now <a href=\"https:\/\/t.co\/sQcC8jmfdz\">https:\/\/t.co\/sQcC8jmfdz<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2028634646930440542?ref_src=twsrc%5Etfw\">March 3, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Markets have consequently pushed back expectations for the next Fed rate cut to September, from earlier projections of July. However, approximately <a href=\"https:\/\/t.co\/Bb1vVWyOLg\" target=\"_blank\" rel=\"noopener nofollow\" title=\"\">two 25-basis-point cuts<\/a> remain priced in for the year.<\/p>\n\n\n\n<p>The repricing reflects growing uncertainty around how persistent energy-driven inflation could influence policy timing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Pressure on Energy-Importing Economies<\/h2>\n\n\n\n<p>Elevated oil prices are weighing more heavily on major energy-importing economies, particularly in Europe and Japan.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Japan is monitoring financial markets with vigilance and will take any necessary action in response to sharp movements, Finance Minister Satsuki Katayama said, as volatility intensifies following the US and Israeli attack on Iran <a href=\"https:\/\/t.co\/6Jbpyf6B4e\">https:\/\/t.co\/6Jbpyf6B4e<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/2028652304870580576?ref_src=twsrc%5Etfw\">March 3, 2026<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Higher energy costs can widen trade deficits, pressure corporate margins and dampen growth expectations. This dynamic has contributed to relative weakness in the euro and yen compared with the US dollar.<\/p>\n\n\n\n<p>The divergence highlights how commodity shocks can alter currency performance through both inflation and trade channels.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Technical Outlook for USDX<\/h2>\n\n\n\n<p>The US Dollar Index (USDX) is trading near <strong>98.52<\/strong>, marginally higher on the session, as the dollar continues to stabilise following its rebound from the <strong>95.34<\/strong> January low. The broader structure shows a recovery phase underway after the sharp mid-winter decline.<\/p>\n\n\n\n<p>On the daily chart, price is now holding above the short-term moving averages. The <strong>5-day (97.97)<\/strong> and <strong>10-day (97.84)<\/strong> are turning higher, while the <strong>20-day (97.45)<\/strong> and <strong>30-day (97.30)<\/strong> sit just below current price and are beginning to flatten.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/05\/image-1-1024x474.jpg\" alt=\"\" class=\"wp-image-43235\"\/><\/figure>\n\n\n\n<p>This alignment suggests improving short-term momentum, with the dollar attempting to build a higher base.<\/p>\n\n\n\n<p>Immediate resistance lies near <strong>98.80\u201399.30<\/strong>, where previous consolidation and rejection occurred. A sustained break above 99.30 would strengthen the recovery narrative and open the path toward the psychological <strong>100.00\u2013100.30<\/strong> region.<\/p>\n\n\n\n<p>On the downside, initial support is seen around <strong>97.80<\/strong>, followed by stronger support near <strong>97.30\u201397.50<\/strong>. A move back below 97.30 would weaken the rebound structure and could shift momentum back to the downside.<\/p>\n\n\n\n<p><strong>Learn more about trading <a href=\"https:\/\/www.vtmarkets.com\/indices\" target=\"_blank\" rel=\"noopener\" title=\"\">Indices<\/a> on <a href=\"https:\/\/www.vtmarkets.com\/trade-now\" target=\"_blank\" rel=\"noopener\" title=\"\">VT Markets<\/a> today.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<ol start=\"1\" class=\"wp-block-list\">\n<li><strong>Why is the US dollar rising?<\/strong> <br>The dollar is strengthening due to safe-haven demand amid escalating Middle East tensions and expectations that higher energy prices could delay Federal Reserve rate cuts.<\/li>\n\n\n\n<li><strong>How do rising oil prices support the dollar?<\/strong> <br>Higher oil prices can reinforce inflation pressures in the US, potentially reducing the urgency for the Fed to cut interest rates. Fewer expected rate cuts generally support the dollar through yield differentials.<\/li>\n\n\n\n<li><strong>Why are the euro and yen under pressure?<\/strong> <br>Europe and Japan are major energy importers. Rising oil prices increase their import costs and can weaken growth prospects, placing downward pressure on their currencies relative to the dollar.<\/li>\n\n\n\n<li><strong>Have Fed rate-cut expectations changed?<\/strong> <br>Yes. Markets have shifted expectations for the next Fed rate cut to September from July, although two rate reductions are still broadly priced in for the year.<\/li>\n\n\n\n<li><strong>What would weaken the dollar from here?<\/strong> <br>A rapid de-escalation in geopolitical tensions, a decline in energy prices or significantly weaker US economic data could reduce safe-haven flows and revive earlier rate-cut expectations.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>The USDX steadies near 98.5 after a sharp rally, supported by safe-haven flows and rising energy prices that may delay Federal Reserve rate cuts. | VT Markets<\/p>\n","protected":false},"author":89,"featured_media":52566,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[9,11],"class_list":["post-52373","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-dollar","tag-indices"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/89"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=52373"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/52373\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/52566"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=52373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=52373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=52373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}