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USD rises as risk-off sentiment grows on Middle East tensions
Elevated oil prices pushed Treasury yields higher across the curve, adding to inflation concerns and weighing on equities.
Risk-off sentiment intensified as escalating Middle East tensions drove investors to sell equities and lifted the U.S. dollar, according to Forexlive’s FX news wrap.
The outlet said President Trump’s comments that he is “close to making a decision” on a military strike against Iran, plus references to a “massive attack,” added uncertainty and helped spur another sharp rally in oil prices.
Higher oil prices reignited inflation worries and sent Treasury yields higher across the curve, while the Fed outlook became more unpredictable ahead of next week’s FOMC meeting, Forexlive noted.
Meanwhile, the European Central Bank held policy steady but remained cautious, with ECB President Christine Lagarde saying energy-related inflation risks are still elevated and that September’s decision will depend on incoming data.