Published by Global Banking & Finance Review®
Posted on March 1, 2026
4 min readLast updated: April 2, 2026
Add as preferred source on GoogleAfter U.S.–Israeli strikes killed Iran’s Supreme Leader, markets sought safety: the yen and Swiss franc strengthened, while the euro weakened. Oil prices surged amid fears of regional disruption, with safe-haven assets like gold also drawing investor demand.
By Alun John
LONDON, March 1 (Reuters) - The safe-haven Swiss franc and Japanese yen firmed, while the euro slid as trading resumed after a weekend that saw the United States and Israel launch their most ambitious attacks on Iran in decades, killing Supreme Leader Ayatollah Ali Khamenei.
The euro was last down 0.4% at around $1.1769 compared with around $1.18 in late Friday New York trade. It fell 0.6% on the Swiss franc to 0.90391, its lowest since 2015.
The dollar was a touch lower versus the Japanese yen at 155.85 yen and was last down 0.3% against the Swiss franc. But the greenback strengthened on sterling and the Australian dollar.
U.S. and Israeli strikes -- and Iranian retaliation -- have sent shockwaves across the Middle East, and through sectors from shipping to air travel to oil on warnings of rising energy costs and disruption to business in the Gulf, a strategic waterway and global trade hub.
Trading was thin late on Sunday European time, but deals in major currency pairs can set the tone. Trading desks have also in the past year become more accustomed to reacting to weekend developments and bring traders in when necessary.
How energy markets react will be a major driver of how stocks, bonds and currencies trade in response to developments in Iran.
Analysts expect oil to open sharply higher on Monday -- traders say it is already up around 10% in over the counter markets. Safe-haven gold is also likely to jump, and global stocks to fall.
Most Gulf equities fell on Sunday though Boursa Kuwait suspended trading and the UAE ordered its stock markets closed on Monday, a sign of the growing economic disruption sweeping the Gulf.
Analysts said Chinese markets would also be in focus given China's reliance on Iranian oil exports.
INVESTORS ARE SCENARIO PLANNING
FX markets were among the first asset class to begin trading following weekend developments, as investors scrambled to work out what comes next.
"We see two scenarios: first, contained disruptions to global energy markets, with limited implications for the world economy. Second, a more protracted, broader conflict leading to an oil shock," said Lombard Odier Chief Economist Samy Chaar.
"We believe that the first case is playing out right now," he said, but, in the second scenario, "commodities, bond yields, currencies, oil-sensitive equity sectors, inflation expectations, monetary policy paths – and in case of a protracted closure (of the Strait of Hormuz), economic growth – would all be affected."
Brent crude oil traded 8%-10% higher at around $80 per barrel over the counter on Sunday, traders said. It jumped on Friday to $73, its highest since July.
Iran is a major energy producer and lies opposite the oil-rich Arabian Peninsula across the Strait of Hormuz, through which about 20% of global oil supply passes.Oil, gas and other shipments from the Middle East via the Strait have been halted since Saturday and hundreds of ships dropped anchor and were not moving on Sunday.
While OPEC+ agreed a modest oil output boost of 206,000 barrels per day on Sunday, though this is less than 0.2% of global supply.
A TEST FOR THE DOLLAR
Analysts said while the market reaction to U.S strikes on Iran last year had been short lived, this situation felt different.
"Current events are unlikely to be as quick a fade," said SEB analysts said in a weekend note. "This would argue for oil at least 10 dollars higher, with the Swiss franc in particular working as a safe haven – the Japanese yen is also likely to benefit." Bitcoin, which typically sells off when global risk aversion takes hold, dropped below $64,000 on Saturday, before finding its footing. It was last at $66,400 -- roughly where it was on Friday.
U.S. strikes against Iran will also be a test for the dollar. While it traditionally appreciates at moments of global stress, U.S. policy turbulence during Donald Trump's second presidency has dented its safe haven value.
"Anything short of a violent rally for the greenback is a death knell for the dollar on a cyclical time horizon," said Marko Papic, chief strategist at BCA Research.
(Reporting by Alun John; Editing by Dhara Ranasinghe and Nick Zieminski)
The yen and Swiss franc are considered safe haven currencies, which investors turn to during geopolitical tensions, prompting their rise after the Iran strikes.
The euro slid, the yen and Swiss franc gained, and the dollar weakened against the yen but strengthened on sterling and the Australian dollar following the attacks.
The strikes increased concerns about oil prices, caused safe haven assets like gold to rise, stocks to drop, and led to declines in most Gulf equities.
Analysts expect oil prices to surge and energy markets to experience volatility due to fears of disruption in the Gulf region.
The Gulf is a strategic trade route; instability there disrupts shipping, air travel, and business, which can impact global financial and energy markets.
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