Finance
Dollar Gains, Euro Sags as Iran War Lifts Energy Prices
Published by Global Banking & Finance Review®
Posted on March 1, 2026
3 min readLast updated: April 2, 2026
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Published by Global Banking & Finance Review®
Posted on March 1, 2026
3 min readLast updated: April 2, 2026
Add as preferred source on GoogleThe U.S.–Israeli strike that killed Iran’s Supreme Leader sparked a flight to safe-haven currencies and a sharp surge in oil prices as investors brace for prolonged Middle East conflict. The dollar and Swiss franc gained while the euro, yen, sterling, AUD and offshore yuan fell amid energy supply fe
By Karen Brettell
March 2 (Reuters) - The euro and yen fell on Monday as concerns about higher oil prices dented the currencies of countries most exposed to energy shortages, while the dollar also benefited from a safe-haven bid on concerns about conflict in the Middle East widening.
The U.S. and Israeli air war against Iran widened on Monday, with no end in sight as Israel attacked Lebanon in response to strikes by Hezbollah, and Tehran kept up its missile and drone attacks on Gulf states.
Brent crude futures rose as much as 13% and were last up 7.3% on the day at $77.77 per barrel.
“It's mostly about exposure to oil,” said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank’s New York branch. “The biggest dollar move came after the headlines that there had been some attacks on the oil facilities in the Gulf."
Qatar halted its production of liquefied natural gas on Monday, prompting precautionary shutdowns of oil and gas facilities across the Middle East.
Europe and Japan are more exposed to higher energy costs than the U.S., which is a net energy exporter.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.31% to 98.37, with the euro down 0.85% at $1.1712.
The dollar strengthened 0.7% to 157.13 against the Japanese yen.
BoJ Deputy Governor Ryozo Himino said growing market volatility would not prevent the central bank from raising rates, arguing that it was inappropriate to automatically tie its policy decision to market developments.
The U.S. currency also benefited from a safe-haven bid as traders analysed how long the conflict is likely to last and how it will ultimately turn out.
“The key thing is just the uncertainty,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “The endgame is unclear.”
U.S. President Donald Trump said on Monday he ordered the attack on Iran to thwart its nuclear and ballistic missile programs, vowing to pursue the war for as long as necessary.
Concerns that higher inflation will push back the date when the Federal Reserve next cuts interest rates also boosted the dollar.
A rate cut is no longer fully priced in until September, compared to previous expectations of July, based on pricing in the Fed funds futures market. Traders continue to price in two 25 basis-point cuts by year-end.
The Swiss National Bank said it was more willing to intervene in foreign currency markets after the conflict in the Middle East pushed the Swiss franc to its highest level against the euro in more than a decade.
The dollar strengthened 1.2% to 0.778 francs. The euro was up 0.24% against the Swiss currency at 0.91, after earlier reaching its strongest in 11 years at 0.9035 to the euro.
The risk-sensitive Australian dollar weakened 0.14% versus the greenback to $0.7103.
In cryptocurrencies, bitcoin gained 4.92% to $68,920.
(Reporting by Karen Brettell, additional reporting by Stefano Rebaudo, Tom Westbrook and Gregor Stuart Hunter; and Nick Zieminski)
Investors sought safety in the dollar and Swiss franc after strikes on Iran created uncertainty and raised the risk of a broader Middle East war, putting downward pressure on the euro.
Oil prices surged around 9% in early Monday trading due to disruptions to seaborne trade in the wake of the conflict.
Safe-haven currencies like the Swiss franc strengthened, while the euro, yen, and Australian dollar weakened as risk aversion set in.
Energy importer currencies like the euro, yen, sterling, Australian dollar, and Chinese yuan saw declines, while exporters’ currencies remained stable.
The closure risked major disruptions to global oil and gas trade, causing many tankers to anchor and increasing volatility in energy prices.
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