USDX Gains on Mideast War as Wall Street Buys Tech Dip

The Euro came under renewed pressure on Tuesday, with EUR/USD slipping below the 1.1700 mark to trade near 1.1685 in early Asian dealings — its weakest level since late January. The move reflects broad-based US Dollar strength as investors seek safety amid intensifying geopolitical tensions in the Middle East.

The United States and Israel reportedly launched extensive strikes across Iran, targeting thousands of sites as part of their ongoing military campaign. US Secretary of State Marco Rubio warned that Washington is bracing for a significant escalation in attacks over the next 24 hours.

Further heightening market anxiety, a senior commander of Iran’s Revolutionary Guard Corps (IRGC) claimed that the Strait of Hormuz has been closed and that Iranian forces would target any vessel attempting to transit the vital shipping route. The sharp deterioration in regional stability has fueled demand for traditional safe-haven assets, lifting the Greenback and weighing on the Euro in the near term.

Attention now turns to the release of the preliminary Harmonized Index of Consumer Prices (HICP) data from the Eurozone later today, which could offer fresh direction for the shared currency.

Gold extended its advance for a fifth consecutive session on Tuesday, supported by escalating geopolitical tensions in the Middle East. The precious metal traded above the $5,350 level in early Asian dealings, maintaining a firm tone despite recent volatility.

Safe-haven demand has remained elevated as the conflict intensifies. Iran’s Revolutionary Guard Corps (IRGC) Navy effectively declared the closure of the Strait of Hormuz, warning that no vessels would be allowed to transit the key maritime corridor. Tehran has also continued launching missiles and drones toward several Persian Gulf states. A reported drone strike targeting the US Embassy in Riyadh further underscored the risk of a broader regional escalation.

Meanwhile, US Secretary of State Marco Rubio said Washington is preparing for a significant increase in attacks in Iran over the next 24 hours. His remarks followed comments from Donald Trump, who cautioned that further military action could be imminent. The US State Department has also urged American citizens to leave Middle Eastern countries immediately, citing serious security risks.

At the same time, expectations that the Federal Reserve will maintain a cautious stance on policy easing could limit downside pressure on the Greenback and temper gains in the non-yielding metal.

Although gold retains a constructive near-term bias, prices remain below the $5,400 mark — a level that capped gains during the previous session. In the absence of major US economic data releases, market participants are likely to remain focused on developments surrounding the Iran conflict, with recent price action suggesting some caution is warranted before positioning for further upside.

Oil prices extended gains in Asian trading on Tuesday, building on the previous session’s surge of more than 7% as escalating conflict in the Middle East fueled concerns over potential supply disruptions.

Markets remain on edge following a joint US-Israeli strike that reportedly killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, triggering a sharp escalation in regional tensions.

Tehran has since threatened a full closure of the Strait of Hormuz — a vital chokepoint responsible for roughly one-fifth of global seaborne oil trade. Iranian officials warned they would target any vessel attempting to transit the waterway, raising fears of disruptions to crude exports from key Gulf producers such as Saudi Arabia, Iraq and the United Arab Emirates.

The rally in oil has been largely driven by concerns that a prolonged confrontation involving the US, Israel and Iran could destabilize the broader Gulf region, potentially damaging energy infrastructure and export capacity.Despite the sharp moves, market reaction on Tuesday suggested a degree of stabilization, with investors reassessing the probability and duration of any sustained supply disruption.

According to analysys oil’s gains have been relatively contained given the scale of supply at risk, indicating that a substantial geopolitical risk premium had already been priced in ahead of the escalation. They added that markets appear to be anticipating a temporary disruption that could be absorbed by the projected global supply surplus this year. Meanwhile, US Secretary of State Marco Rubio said Washington would unveil measures aimed at mitigating higher energy costs, signaling efforts to cushion the economic impact of rising crude prices.

Even so, oil markets remain highly sensitive to further geopolitical developments, and volatility is likely to persist as traders monitor headlines for signs of additional escalation.

US equities closed mixed on Monday, but the major indices recovered sharply from early losses as investors stepped back into the market following an initial selloff triggered by US airstrikes on Iran. Strength in energy and large-cap technology shares helped stabilize sentiment and limit downside pressure on the broader benchmarks.

The rebound suggests investors are not yet positioning for a sustained risk-off move, instead treating the geopolitical escalation as a developing event rather than a full-blown systemic shock. Sector rotation was evident, with traders favoring areas seen as more defensive or structurally supported, while avoiding more rate-sensitive and globally exposed pockets of the market.

Over the weekend, the United States and Israel carried out coordinated strikes inside Iran, reportedly killing hundreds, including Supreme Leader Ayatollah Ali Khamenei. Iran responded with attacks targeting Israel and several Gulf states, including Bahrain, Qatar and the United Arab Emirates, marking a significant escalation in regional tensions.

For equity markets, the key transmission channel remains energy prices. The sharp move higher in crude has revived concerns about renewed inflationary pressure, particularly if supply disruptions persist. Higher oil prices could weigh on corporate margins and consumer spending, complicating the Federal Reserve’s rate outlook and potentially delaying anticipated easing.

Despite these risks, the relatively contained reaction in major US indices indicates that investors are, for now, betting the conflict will not materially derail domestic growth or earnings momentum. Markets appear to be balancing geopolitical uncertainty against still-resilient economic fundamentals, with volatility likely to remain elevated as headlines evolve.