Deutsche Bank's FX volatility index has jumped to an eight-month high as the Iran war escalates, sending shockwaves through currency markets. The gauge of implied volatility tracks how much investors expect currency prices to fluctuate over the coming months.

The spike reflects growing uncertainty among traders about the economic fallout from the conflict. Currency markets are particularly sensitive to geopolitical events, as they can rapidly shift trade flows, capital movements, and central bank policies.

This level of volatility hasn't been seen since before the pandemic, when markets were grappling with lockdowns and supply chain disruptions. The current surge suggests investors are bracing for significant currency swings as the Iran war continues to unfold.