Dollar rises 0.15% on safe-haven demand as US-Iran hostilities escalate

Rich Asplund Mon, July 13, 2026 at 7:34 AM PDT | 3 min read

• DX-Y.NYB: -0.29%
• CL=F: +0.97%

The dollar index (DXY00) rose by +0.15% today, finding support from safe-haven demand amid escalating hostilities in the Middle East after the US and Iran traded attacks over the weekend. Additional support came from stock market weakness, which boosted liquidity demand for the dollar, and a +4% jump in crude oil prices that raised inflation expectations and could prompt the Federal Reserve to tighten monetary policy.

The dollar extended its gains after President Trump announced the US is reinstating the Iranian blockade and preventing Iranian ships from using the Strait of Hormuz.

Over the weekend, the US launched fresh missile attacks against Iran, targeting air-defense systems, coastal radar sites, and missile and drone capabilities. Iran retaliated with missile and drone attacks on targets in Jordan, Bahrain, Kuwait, and Qatar, and also attacked two vessels attempting to transit the Strait of Hormuz.

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Swaps markets are pricing in a 35% probability of a +25 basis point rate hike at the next FOMC meeting on July 28–29.

EUR/USD (^EURUSD) fell to a one-week low, down -0.12%. The euro is under pressure from a strong dollar and a +4% surge in crude oil prices, which is negative for the Eurozone economy as Europe imports most of its energy.

Markets are discounting a 14% chance of a +25 basis point rate hike by the ECB at its next policy meeting on July 23.

USD/JPY (^USDJPY) rose by +0.39% today. The yen weakened after Reuters reported that Japan has no plans to overhaul the Government Pension Investment Fund's (GPIF) asset allocation. The yen had rallied last Friday on speculation that the $1.8 trillion GPIF could shift more money into domestic assets, following comments from Japanese Finance Minister Satsuki Katayama urging pension funds to increase domestic investment. The yen is also under pressure from the +4% jump in crude oil prices, which is negative for Japan's economy as the country imports more than 90% of its energy.

The risk of currency market intervention to support the yen remains high, as the yen stays firmly above 160 per dollar—a 39-year low. Japanese authorities have intervened in the forex market several times in the past when the yen surpassed that level.

Markets are discounting a 2% chance of a +25 basis point rate hike by the Bank of Japan at its next policy meeting on July 31.

August COMEX gold (GCQ26) is down -69.20 (-1.68%), and September COMEX silver (SIU26) is down -1.695 (-2.82%).

Gold and silver prices are falling sharply amid a surge in crude oil prices. WTI crude oil is up more than +4% after the US and Iran exchanged military strikes over the weekend, lifting inflation expectations and potentially prompting central banks worldwide to tighten monetary policy—a bearish factor for precious metals. Higher global bond yields today are also bearish for precious metals, though stock market weakness has spurred some safe-haven buying.

Recent fund liquidation of precious metals is bearish for prices. Long holdings in gold ETFs fell to a 9.5-month low last Monday, after reaching a 3.5-year high on February 27. Long holdings in silver ETFs fell to an 11.5-month low last Friday, from a 3.5-year high posted on December 23.

Strong central bank demand for gold is supportive of prices. Bullion held in China's PBOC reserves rose by +320,000 ounces to 74.96 million troy ounces in May—the largest monthly increase in 17 months and the nineteenth consecutive month the PBOC boosted its gold reserves.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com.