The US dollar is extending gains as the Iran conflict drives safe-haven demand, with Monex Europe analysts warning the currency will remain supported unless credible de-escalation emerges. Higher oil prices from the war are reinforcing expectations that the Federal Reserve will maintain restrictive monetary policy longer than previously anticipated.

The DXY dollar index rose 0.1% to 99.291, reflecting persistent strength. Analysts note that while markets may underestimate the scope of future U.S. policy easing once energy concerns subside, the immediate outlook favors dollar strength. The conflict has created a perfect storm of geopolitical risk and commodity price pressures that typically benefit the greenback.

Meanwhile, the euro fell 0.1% to $1.1554 as higher oil prices overshadow potential European Central Bank rate hike expectations. ING analyst Francesco Pesole noted the euro-dollar pair has become disconnected from interest rate differentials and now mirrors oil price movements. He warned that a break below $1.15 could target August's $1.140 low, signaling further euro weakness as the conflict continues.