The U.S. dollar is likely to remain supported by safe-haven demand as Middle East tensions escalate following military strikes between the U.S. and Iran, according to DBS Group Research strategist Chang Wei Liang. President Trump's warning that Iran will 'pay the price' for dragging out talks raises concerns about renewed forceful military actions. The U.S. Dollar Index slipped 0.05% to 99.900 despite the safe-haven appeal.

Asian currencies showed mixed results in early trading, consolidating against the dollar amid risk-off sentiment. The dollar advanced 0.2% to 1,525.60 won while dipping 0.1% to 32.92 baht. Analysts at Commerzbank Research noted that recent attacks further undermine hopes of restoring the April ceasefire and raise risks of prolonged disruptions through the Strait of Hormuz.

The Australian dollar weakened 0.1% to US$0.6994, pressured by persistent U.S. inflation concerns that keep Federal Reserve rate cut expectations in check. StoneX analyst Matt Simpson pointed to sticky inflation data released overnight as the primary headwind for the currency. Technical analysis suggests bears will continue targeting the 0.6900 level against the greenback.

Geopolitical uncertainty combined with elevated inflation pressures creates a challenging environment for risk-sensitive currencies, with the dollar maintaining its safe-haven status despite modest intraday losses.