Wall Street rallied nearly 3% on speculation the US might end hostilities with Iran, with tech stocks outperforming energy companies. President Trump seeks an off-ramp in the conflict, but questions remain about oil flow through the Strait of Hormuz. Officials modeling scenarios with oil prices as high as $200 per barrel, potentially sending US petrol to $7 per gallon.

The dollar's performance has surprised market watchers, with the DXY index rising just 2.6%—remarkably weak compared to historical crises. Analysts note the rally may reflect hedging unwinding rather than genuine haven demand. Even typically dollar-skeptical economists like Ajay Rajadhyaksha at Barclays acknowledge changing their tune.

Macquarie strategists see a 40% chance the conflict continues through June, potentially pushing oil to $200 and triggering a recession similar to the Covid downturn, with US output shrinking by approximately 1% in Q2. Economists warn that even $150 oil presents challenges, but $200 oil would test the limits of consumer demand and economic resilience.