Allianz Global Investors is reconsidering its dollar strategy as Middle East tensions boost the US currency's haven appeal. Greg Hirt, who oversees €580 billion in multiasset strategies, said the firm may shift from its year-long bearish position on the greenback as the Iran conflict drives safe-haven flows. The dollar hit a three-week high after Trump indicated the bombing campaign could last weeks.

This marks a reversal from AllianzGI's stance roughly a year ago when tariff threats prompted a move into non-dollar assets across Europe and emerging markets. The current crisis has flipped the traditional negative correlation between oil and the dollar, with crude's four-year high creating a positive relationship for the first time in three months. The crowded anti-dollar trade leaves room for near-term appreciation.

Hirt has also grown more optimistic about US Treasuries after they rose amid stock market pressure last week. He noted the Mideast conflict could drive inflation in Europe and Japan, which rely heavily on energy imports, potentially complicating interest rate outlooks and Japan's monetary tightening prospects.