A surge in US-Iran tensions, particularly over the US naval blockade of Iranian ports and threats to shipping in the Strait of Hormuz, has fueled a risk-off sentiment in global markets, supporting the US Dollar (USD) across multiple currency pairs and pressuring commodities such as Gold and Silver [1][2][3][5]. The NZD/USD pair extended its retracement slide for a second day, dropping to the 0.5840 region and flirting with its 200-day Simple Moving Average, as the USD benefited from safe-haven flows amid the geopolitical standoff [1]. US President Donald Trump reiterated the continuation of the US Navy blockade and authorized force against boats laying mines, while Iran demanded the removal of the blockade as a precondition for negotiations [1][3].
The USD/CHF pair rose for the fourth consecutive day, trading around 0.7870, as the USD gained on safe-haven demand. The US military intercepted two Iranian oil supertankers attempting to evade the blockade, and contingency plans are being prepared should the ceasefire collapse [2]. US economic data showed Weekly Initial Jobless Claims rising to 215K from 212K, and S&P Global PMIs surprising to the upside (Manufacturing at 54.0, Services at 51.3), indicating ongoing economic strength [2].
Commodities have come under pressure: Gold (XAU/USD) remained depressed below $4,700, near a two-week low, and is set for its first weekly loss in five weeks as the strong USD and inflation fears weigh on the metal [3]. Silver (XAG/USD) traded near a 10-day low around $75, pressured by elevated oil prices (WTI near $95.00) due to the Strait of Hormuz closure, which has fueled global inflation expectations and discouraged dovish central bank policies [5]. The technical outlook for both metals remains bearish, with Gold vulnerable to further declines below $4,680.47 and Silver eyeing support at $72.61 [3][5].
The risk-off environment has also influenced FX markets. The Euro was the strongest against the New Zealand Dollar in today's trading, while the EUR/JPY cross held above 186.50, testing the nine-day EMA barrier and maintaining a constructive bullish bias as long as it remains above key averages [4]. However, the overall tone for risk-sensitive currencies like NZD remains negative due to the USD's safe-haven appeal and persistent geopolitical risks [1][4].
Looking ahead, market participants are focused on upcoming central bank meetings, including the Bank of Japan, Federal Reserve, and European Central Bank next week. The Fed is expected to keep rates unchanged at 3.50%-3.75% and signal vigilance regarding upside inflation risks stemming from geopolitical tensions [5]. Current market pricing suggests only one 25-basis-point rate cut by the Fed in 2026 [1][3]. Meanwhile, sticky inflation in New Zealand (annual inflation at 3.1% in Q1 2026) may prompt the RBNZ to maintain or tighten policy, potentially limiting NZD downside [1]. The Swiss National Bank may also intervene to curb excessive CHF appreciation amid safe-haven flows and inflation concerns [2].
CONCLUSION
Escalating US-Iran tensions and disruptions in the Strait of Hormuz have driven strong safe-haven demand for the US Dollar, pressuring risk-sensitive currencies and commodities while fueling inflation fears. The market remains highly sensitive to geopolitical developments, with central bank policy outlooks expected to remain cautious. Investors should brace for continued volatility as the situation evolves and key monetary policy decisions approach.