Dollar near one-month low as U.S.-Iran strikes roil markets

The escalating military confrontation between the United States and Iran sent shockwaves through global financial markets on Thursday, with the dollar hovering near a one-month low and oil prices climbing for a fourth consecutive day as investors assessed the growing risks to energy supplies and the broader economic outlook.

Military Escalation Drives Energy Fears

The U.S. conducted a new wave of strikes against Iran's coastal defense systems and cruise missile storage and launch sites on Wednesday, according to Reuters ↘ 4.69%, after reimposing a naval blockade of Iranian ports. U.S. Central Command said American forces struck targets on Greater Tunb Island during a 90-minute wave, while Iran threatened to shut off more regional energy exports.defensenews+3

The strikes marked the latest escalation in hostilities that have intensified since Iran said late Saturday it had closed the Strait of Hormuz. Brent crude futures rose for a fourth consecutive session on Thursday, trading near a one-month high at $85.28 a barrel, as concerns over disrupted flows through one of the world's most critical oil chokepoints mounted.reuters+1

Dollar Weakens on Inflation Data

The U.S. dollar index held near 100.47 on Thursday, its lowest level since June 18, after falling 0.8% over the previous two sessions. Softer-than-expected inflation data drove the decline — U.S. producer prices unexpectedly fell in June in their largest drop in 14 months, according to Reuters, adding to evidence that inflation was easing before the latest Middle East flare-up.reuters

Markets have largely priced out a Federal Reserve rate hike this month, with the implied probability slashed to 11% from 45% at the start of the week. The euro rose to $1.1472, its strongest in a month, while the yen gained for a third straight session.wtvbam+1

Crypto and Gold Under Pressure

Bitcoin ↘ 0.07% traded near $64,720 on Thursday, pulling back from levels above $65,000 earlier in the week. Gold fell to around $4,034 per ounce, down 0.64% on the day, as the precious metal faced headwinds from a stabilizing dollar and elevated real yields despite the geopolitical turmoil.finance.yahoo+1

The market now faces a dual tension: cooling U.S. inflation suggests the Fed can hold rates steady, but the risk of a protracted conflict disrupting global oil supplies threatens to reignite price pressures in the months ahead.