The dollar maintained its proximity to its recent highs on Tuesday, while traders await a deadline imposed by the United States on Iran to reopen the Strait of Hormuz to shipping traffic, or face attacks on its infrastructure.

The war in the Middle East and the closure of the vital maritime corridor in the Gulf led to a sharp rise in energy prices, which pushed investors toward the dollar as the most effective safe haven, a matter that strengthened the power of the American currency, especially in Asian markets.

Even though hopes of reaching an agreement or achieving a diplomatic breakthrough limited dollar purchase operations during the Easter holiday, markets remained tense, with a lack of sellers for the American currency ahead of the deadline set by the American President Donald Trump at eight in the evening US Eastern Time.

The Japanese yen fell to 159.80 against the dollar, close to its lowest levels in decades, which are levels that pushed Japanese authorities to intervene in the market in the year 2024.

Brent Donnelly, president of Spectra Markets, said: "The market is holding long positions on the dollar in anticipation of more escalation, but the performance of stocks, gold, and the offshore yuan limits the gains of the American currency." He added: "It is difficult to provide high-confidence forecasts in such a situation... we will wait until eight in the evening to see the nature of the attacks that Iran or the United States and Israel may launch in the meantime."

Trump had stated on Monday that Iran could be "wiped out in one night," adding that that night "might be tomorrow night." He also pledged to destroy Iranian power plants and bridges, rejecting fears that this would be considered a war crime or that it would lead to the alienation of the Iranian people.

The US dollar index rose by a slight percentage amounting to 0.05% to 100.03, after it recorded last week 100.64, which is its highest level since May 2025.

Thu Lan Nguyen, head of FX and commodity research at Commerzbank, said:

"The Iranian leadership showed, surprisingly to many, its ability to exercise complete control over the Strait of Hormuz," adding that "it is already clear that Iran intends to use this control to serve its long-term interests."

Iran and Israel exchanged attacks on Tuesday at a time when Tehran refuses to reopen the strait. Israel said that it carried out a wave of air strikes targeting Iranian government infrastructure, while defenses intercepted Iranian missiles over Israel and Saudi Arabia.

The euro stabilized almost at $1.1535, while markets price three increases in interest rates by the European Central Bank by the end of the year, in light of the confirmation of the bank's officials of their readiness to act to confront inflation.

Dimitar Radev, a member of the European Central Bank, warned that inflation expectations in the eurozone may rise at a faster pace than they were previously, which necessitates the bank's readiness to raise interest rates quickly if sustained price pressures appear.

As for the Australian and New Zealand dollars, which fell sharply with the escalation of fighting and Iranian attacks on energy infrastructure in the Middle East in late March, they recovered from their lowest levels but remained weak at $0.6912 and $0.57 respectively.

The South Korean won is still trading above the 1500 level against the dollar, which is a level that was not recorded previously except during crises such as the global financial crisis in 2009 and the crisis of the late nineties. Also, the Indonesian rupiah dropped to a record low level, while the Chinese yuan maintained its relative stability that it witnessed in March.

Analysts at Commonwealth Bank of Australia said that the dollar may fall slightly in the short term due to optimism that the United States may end the war with Iran. But they added:

"There are three parties in the war: the United States, Israel, and Iran. What matters to the global economy and currency markets is whether the Strait of Hormuz is open or not. The exit of the United States from the conflict does not mean the reopening of the strait."

Gold prices rose in European trading on Tuesday to move into positive territory after two days of losses, on their way toward a two-week high, supported by the current decline in the levels of the US dollar against a basket of global currencies.

This comes amid the markets' assessment of the developments of the Iran war, especially with the approaching end of the deadline set by the US President Donald Trump for Iran to reopen the Strait of Hormuz to global navigation, before launching violent attacks on Iranian infrastructure.

Price overview

- Gold prices today: gold prices rose by 1.0% to ($4,694.61), from the opening level of trading at ($4,648.93), and recorded the lowest level at ($4,616.62).

- At the settlement of prices on Monday, gold prices lost 0.6%, in the second consecutive daily loss, with the continuation of correction and profit-taking operations from the highest level in two weeks at $4,800.38 per ounce.

US dollar

The dollar index fell on Tuesday by about 0.25%, to continue its losses for the second consecutive session, reflecting the continued decline in the levels of the American currency against a basket of major and minor currencies.

This decline comes with some investors holding onto hopes of reaching a ceasefire agreement between the United States and Iran before the expiration of US President Donald Trump’s deadline to reopen the Strait of Hormuz to global navigation.

Iran war updates

- Trump threatens to target civilian infrastructure if Iran does not comply with the deadline later today, Tuesday.

- The Wall Street Journal: Trump in his private talks with officials has become less optimistic about Iran concluding a deal.

- The Wall Street Journal: The gap between the positions of Washington and Tehran cannot be narrowed before the expiration of Trump’s deadline.

- Axios: Trump may postpone the attack on Iran if he senses real signs of a deal looming on the horizon.

- Axios: Trump alone is the owner of the decision to begin the destruction of Iranian infrastructure at eight in the evening Tuesday.

US interest rates

- According to the CME FedWatch tool from CME Group: the pricing of the probabilities of keeping American interest rates without any change in the upcoming April meeting is currently stable at 99%, and the pricing of the probabilities of raising interest rates by about 25 basis points is stable at 1%.

- Traders have almost entirely ruled out any probabilities of a interest rate cut by the Federal Reserve this year. Before the outbreak of the Iran war, expectations were pointing to two cuts this year.

- In order to re-price those probabilities, investors await throughout this week the release of many important economic data from the United States, about the levels of growth and inflation in the largest economy in the world.

Expectations about gold performance

Financial market strategist Ilya Spivak said: Everyone is in a state of anticipation to know the results of this sharp speech launched by the American President during the past days.

Spivak added: Last year, gold witnessed a remarkable rise, and turned into an independent speculative market. It is likely that we will witness the return of this rise this year after the current risks recede... and by the end of the year, we may reach levels closer to $5,500 and $6,000 per ounce.

SPDR fund

Gold holdings at the SPDR Gold Trust fund, the largest global exchange-traded fund backed by the metal, increased on Monday by about 3.43 metric tons, to bring the total to 1,054.42 metric tons, which is the highest level since last February 20.

The euro fell in European trading on Tuesday against a basket of global currencies, to resume its losses that paused temporarily yesterday against the US dollar, as the focus of investors is currently directed toward buying the American currency as a preferred alternative investment, while awaiting the developments of the Iran war, especially the approaching end of Donald Trump’s deadline to reopen the Strait of Hormuz later today.

With the continued rise in global oil prices and eurozone inflation exceeding the European Central Bank’s medium-term target, the probabilities of raising European interest rates at least once this year increased, pending the release of more crucial economic data in Europe.

Price overview

- Euro exchange rate today: the euro fell against the dollar by about 0.15% to ($1.1524), from the opening price of the day at ($1.1540), and recorded the highest level at ($1.1548).

- The euro ended Monday’s trading up by 0.25% against the dollar, in the first gain within the last three days, with renewed hopes of reaching a ceasefire agreement in the Middle East under Pakistani sponsorship.

US dollar

The dollar index rose on Tuesday by 0.15%, to approach its highest levels in several months, reflecting the rise of the American currency against a basket of global currencies.

Buying operations of the US dollar are active as it is the best investment haven, in light of traders’ anticipation of the deadline set by Washington to reopen the Strait of Hormuz to navigation, with increasing fears of Iranian infrastructure being subjected to attacks in the event of non-compliance.

Iran war updates

- Trump threatens to target civilian infrastructure if Iran does not comply with the deadline later today, Tuesday.

- The Wall Street Journal: Trump in his private talks with officials has become less optimistic about Iran concluding a deal.

- The Wall Street Journal: The gap between the positions of Washington and Tehran cannot be narrowed before the expiration of Trump’s deadline.

- Axios: Trump may postpone the attack on Iran if he senses real signs of a deal looming on the horizon.

- Axios: Trump alone is the owner of the decision to begin the destruction of Iranian infrastructure at eight in the evening Tuesday.

Global oil prices

Global oil prices rose by an average of 2.5% on Tuesday, to extend their rise for the third consecutive day, with Brent crude recording the highest level in four weeks at $116.50 per barrel, due to fears of the continued closure of the Strait of Hormuz and the failure of peace negotiations between the United States and Iran.

European interest rates

- Lagarde, President of the European Central Bank, said: the bank is ready to raise interest rates even if the expected rise in inflation is short-term.

- Data last week showed that inflation in the eurozone exceeded the European Central Bank's target to reach 2.5% in March with the rise in energy prices.

- Following that data, the money market pricing of the probabilities of the European Central Bank raising European interest rates by about 25 basis points in this April rose from 30% to 35%.

- Sources reported to Reuters that the European Central Bank is likely to begin discussing raising interest rates during the meeting of this month.

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone about the levels of inflation, unemployment, and wages.

The Japanese yen fell in Asian trading on Tuesday against a basket of major and minor currencies, continuing its losses for the second consecutive day against the US dollar and approaching the point of trading below the 160 yen level. This is as the focus of investors is currently directed toward buying the American currency as a preferred alternative investment, with the approaching end of Donald Trump’s deadline to reopen the Strait of Hormuz later today.

Data released today in Tokyo showed the continued contraction of Japanese household spending in February for the third consecutive month, in the latest indicators of the receding of inflationary pressures on monetary policy makers in the Japanese central bank.

Price overview

- Japanese yen exchange rate today: the dollar rose against the yen by 0.15% to (¥159.93), from the opening price of the day at (¥159.68), and recorded the lowest level at (¥159.56).

- The yen ended Monday’s trading down by 0.1% against the dollar, in the third loss within the last four days, due to fears of the escalation of the Iranian war.

US dollar

The dollar index rose on Tuesday by 0.15%, to approach its highest levels in several months, reflecting the rise of the American currency against a basket of global currencies.

Buying operations of the US dollar are active as it is the best investment haven, in light of traders’ anticipation of the deadline set by Washington to reopen the Strait of Hormuz to navigation, with increasing fears of Iranian infrastructure being subjected to attacks in the event of non-compliance.

Iran war updates

- Trump threatens to target civilian infrastructure if Iran does not comply with the deadline later today, Tuesday.

- The Wall Street Journal: Trump in his private talks with officials has become less optimistic about Iran concluding a deal.

- The Wall Street Journal: The gap between the positions of Washington and Tehran cannot be narrowed before the expiration of Trump’s deadline.

- Axios: Trump may postpone the attack on Iran if he senses real signs of a deal looming on the horizon.

- Axios: Trump alone is the owner of the decision to begin the destruction of Iranian infrastructure at eight in the evening Tuesday.

Gloomy data

Data today, Tuesday, in Tokyo showed the fall of household spending in Japan by 1.8% on an annual basis in February, worse than market expectations of a fall of 0.8%, and spending recorded a fall of 1.0% in January, in the third consecutive monthly contraction.

The contraction of consumer spending in Japan paves the way for the fall of prices and the slowing of the pace of inflation during the coming period. And there is no doubt that the receding of inflationary pressures on monetary policy makers in the Central Bank of Japan reduces the chances of conducting increases in Japanese interest rates during the coming period.

Japanese interest rates

- Following that data, the pricing of the probabilities of the Japanese central bank raising interest rates by a quarter of a percentage point in the April meeting fell from 15% to 10%.

- In order to re-price those probabilities, investors await the release of more data about the levels of inflation, unemployment, and wages in Japan.