Market Focus Harmovest Capital | Why Is the US Dollar Still Rising?

Key Highlights

• US-Iran conflict escalates once again.

• Safe-haven demand continues to rise.

• The US Dollar Index remains firm.

Market ReviewEscalating US-Iran Tensions Drive Oil Prices Higher

The United States launched airstrikes on Iranian coastal military targets while tightening sanctions on Iran's oil exports. Iran responded with retaliatory attacks, raising concerns that the fragile ceasefire could deteriorate further.

As geopolitical tensions intensified, international crude oil prices surged, with Brent crude rising nearly 5% to around USD 76 per barrel. Investors shifted toward safe-haven assets, providing continued support for the US Dollar, while broader risk assets faced renewed pressure.

Affected Markets: US Dollar, Gold, S&P 500

Market Outlook

The renewed escalation between the US and Iran has pushed oil prices and inflation expectations higher, reinforcing market expectations that the Federal Reserve will maintain a hawkish policy stance. This has continued to support the US Dollar Index.

Although gold has benefited from safe-haven demand, the stronger US Dollar has limited its upside momentum. Markets will continue to monitor developments in the Middle East and any policy responses that could influence global financial markets.

Today's Key EventReserve Bank of New Zealand Interest Rate Decision

Today's market focus will be on the Reserve Bank of New Zealand's interest rate decision and policy statement. With inflation remaining above the central bank's target range, investors will closely watch for any signals of further monetary tightening, which could influence the New Zealand Dollar and overall market sentiment.

Markets to Watch:

• US Dollar

• Precious Metals (Gold, Silver, Platinum)

• US Equity Indices

Trading Idea: Bullish on precious metals (await confirmation following the policy announcement).

Market SentimentFear & Greed Index

The latest Fear & Greed Index has risen to 43, up from 36, indicating that market fear has eased slightly and risk appetite has improved.

However, geopolitical tensions remain elevated, meaning investor sentiment could remain volatile in the near term as markets continue to react to developments in the Middle East.

Technical AnalysisXAU/USD (Gold)

Gold has recently broken below both the EMA 89 and EMA 144, confirming a weaker technical structure and reinforcing the current bearish trend.

While geopolitical uncertainty continues to provide some safe-haven support, the strength of the US Dollar has capped gold's upside potential.

In the short term, unless gold can reclaim these key moving averages, the overall outlook remains bearish. Traders may consider selling into rallies while monitoring key support levels for potential price reactions.