Dollar's Resurgence Amid Middle East Tensions

The dollar was set to break its three-week slump on Friday as trading activity remained subdued amid unresolved U.S.-Iran peace negotiations. This uncertainty thwarted any immediate hopes of easing Middle East tensions, lending support to the dollar's safe-haven appeal.

Despite a three-week ceasefire extension between Lebanon and Israel, Iran flexed its strategic might by releasing footage of commandos seizing a cargo vessel in the Strait of Hormuz. The uncertainty surrounding the reopening of this critical shipping lane has kept oil prices surging.

As traders look ahead to a central-bank-heavy week, major institutions like the Bank of Japan and the European Central Bank prepare to issue policy updates. Market participants are keenly observing how these banks will navigate heightened energy prices and potential inflationary pressures.