Finance
Dollar Holds Near 1-1/2-week High as Iran-US Standoff Persists
Published by Global Banking & Finance Review®
Posted on April 23, 2026
3 min readLast updated: April 23, 2026
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Amid renewed U.S.–Iran tensions and a naval blockade choking the Strait of Hormuz, the dollar remains near a one-and-a-half‑week peak. Elevated oil prices above $100/barrel and persistent geopolitical risks are weighing on markets.
Dollar Nears 1.5-Week High as Iran-US Standoff Drives Oil and Markets
Market Reactions and Currency Movements Amid Middle East Tensions
By Jiaxing Li
Dollar and Oil Prices Respond to Geopolitical Uncertainty
HONG KONG, April 23 (Reuters) - The dollar wobbled near a 1-1/2-week high on Thursday as a standoff between Iran and the U.S. in the Middle East war and lack of progress in peace talks pulled oil prices back above $100 per barrel, weighing on investor sentiment.
Escalation in the Strait of Hormuz
Tehran seized two ships in the Strait of Hormuz on Wednesday, escalating tensions after U.S. President Donald Trump extended a ceasefire with Iran indefinitely with no sign of peace talks restarting.
The two sides now remain divided on a ceasefire, blockade, nuclear issues and control of the strait, leaving the strategic waterway still effectively shut and triggering an energy shock in a blow to economies across the world.
Currency Performance and Investor Sentiment
Euro, Sterling, and Other Majors
The euro was fetching $1.1712, having touched its lowest since April 13 earlier in the session. The single currency is headed for a 0.4% decline in the week, its first drop in four weeks. Sterling stood at $1.3497.
Australian and New Zealand Dollars
The Australian dollar was steady at $0.7165, not far from the four-year high it touched last week. The New Zealand dollar traded at $0.59045. Against the yen, the U.S. dollar nudged down 0.02% to 159.48 yen.
Safe-Haven Demand and Dollar Index
The dollar benefited in March on safe-haven demand as the war erupted but the prospect of a peace deal and a ceasefire at the start of this month spurred a risk-on rally, with the greenback giving up most of its gains.
The U.S. dollar index, which measures the currency against a basket of six major peers, was at 98.644, near its highest level since April 13. The index is on track for a moderate 0.4% gain this week following two weekly drops.
Analyst Views and Economic Outlook
Expert Commentary on Risks and Inflation
"Despite Trump's ceasefire extension, tensions remain elevated with Iran refusing to reopen Hormuz while U.S. naval blockades persist, raising the risk of prolonged supply disruption," Skye Masters, head of markets research at National Australia Bank, said in a note.
Tail risks are under-priced, and inflation pressures will linger well into year-end, Masters said.
Impact on Consumer Confidence and Rate Expectations
The nearly two-month war in the Middle East has led to soaring fuel prices, eroding consumer confidence to a record low and wiping out market pricing for rate cuts this year.
The U.S. Federal Reserve will wait at least six months before cutting interest rates this year, according to a Reuters poll of economists, as war-driven energy shocks reignite already-elevated inflation.
Upcoming Economic Data
Focus will be on U.S. weekly initial jobless claims and PMIs due to be released later on Thursday for clues on whether the impact of soaring energy prices is filtering through to the broader economy.
(Reporting by Jiaxing Li in Hong KongEditing by Shri Navaratnam)
Key Takeaways
- •U.S.–Iran standoff intensifies after Iran seized or attacked multiple vessels in the Strait of Hormuz, prompting elevated oil prices above $100/barrel and elevated market risk.
- •The dollar is benefiting from safe‑haven demand, with the U.S. dollar index near its highest since April 13 and major currencies like the euro and pound under pressure.
- •Energy shock from disruptions is reinforcing inflation concerns and diminishing investor expectations for near‑term Fed rate cuts.
Frequently Asked Questions about Dollar holds near 1-1/2-week high as Iran-US standoff persists
1Why is the US dollar holding near a recent high?
The US dollar remains near a recent high due to continued tensions between Iran and the US, impacting oil prices and investor sentiment.
2How has the Iran-US standoff affected oil prices?
The conflict has pushed oil prices back above $100 per barrel due to disruptions in the Strait of Hormuz and fears of prolonged supply interruptions.
3What is the outlook for US Federal Reserve interest rates?
The Federal Reserve is expected to wait at least six months before cutting interest rates due to inflation pressures from the ongoing conflict.
4How are other currencies performing against the US dollar?
The euro, British pound, Australian dollar, and New Zealand dollar have all seen fluctuations amid the standoff, while the US dollar index is up.
5What impact has the Middle East conflict had on global economies?
Soaring fuel prices and lingering inflation have eroded consumer confidence, limiting the prospects for rate cuts and impacting economies worldwide.