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Dollar seen supported as Gulf tensions keep risks skewed higher

ING strategists forecast a potential move in the DXY back toward 101.5, linking the dollar’s bid to elevated oil prices and investors’ complacency about military escalation.

Reported · Written up by our desk · Major Pairs

ING strategists Francesco Pesole, Frantisek Taborsky, and Chris Turner said the US dollar has been finding broad-based support as markets gradually adjust to escalating tensions in the Gulf. They added that USD has “room to rally,” with risks skewed higher amid investor complacency toward military developments.

The analysts pointed to recent US and regional developments, including President Donald Trump’s pledge of retaliation against Iran after the killing of three US service members in Jordan, and Houthi militants threatening a blockade of Saudi Arabia in the Red Sea.

They also connected the currency move to oil, noting Brent at $90 and arguing FX markets are now reacting less to the risk of sharp, short-term spikes and more to the prospect that oil prices remain elevated for longer.

As a result, the strategists said a return of the US Dollar Index, DXY, toward 101.50 would fit the current backdrop, citing a shift reflected in bond selling and spillover into equities.

Latest closeBrent $84.94 ▼0.0%|Dollar index 100.71 ▲0.2%

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