Dollar Swings Back: Markets Rattle Amid Continuing Middle East Tensions

The U.S. dollar surged on Thursday, reversing recent losses, as President Donald Trump's address on Iran stirred fears of protracted tensions in the Middle East. Investors turned to the dollar as a safe haven, causing declines in the yen, euro, and sterling.

The dollar index rose nearly 0.5% as the market reacted to Trump's promises of more aggressive strikes against Iran. Stocks fell, and oil prices climbed over 6%, with Brent crude nearing $110 per barrel, reflecting renewed concerns over economic disruptions and potential stagflation.

Currency strategist Carol Kong noted, "The dollar can continue to strengthen as realization sets in that global economic growth may slow further." As U.S. Treasury yields rose amid inflation fears, attention now turns to the upcoming U.S. non-farm payrolls report.