US dollar hits new highs on growing fear abroad, Treasury bond demand
In response to Iran's sudden involvement in Middle Eastern conflicts, investors are rallying towards safe-haven assets, driving the dollar to new heights against major currencies and propelling bond demand.
US dollar rises on Middle East tensions
Amid increasing geopolitical tensions in the Middle East - particularly the news of an Iranian attack on Israel - currencies such as the EUR, GBP, JPY, and CAD have fallen to their lowest points of the year against the US dollar. Investors seeking stability in uncertain times have contributed to the dollar's ascent, highlighting its status as a go-to safe haven.
Gold prices continue all-time high trading
In times of political unrest and potential conflict, gold solidifies its position as a cornerstone for quality investment, reaching sustained all-time highs. As a perceived refuge from the volatility of currencies and government debt, gold draws heightened attention from investors looking to safeguard their assets.
Treasury bonds moved higher on geopolitical risk
US Treasury bonds, backed by the security of the US government, have seen a surge in demand amidst rising geopolitical risks. This demand requires investors to convert to US dollars to purchase Treasuries, bolstering the value of the US dollar in the process.
EUR/USD falls below 1.0700
The EUR/USD currency pair has plummeted to lows unseen since November, edging closer to a year-long low around 1.0500. EUR/USD fell over 200 pips from the week's highs, catalyzed by a fall through 1.0800 following stronger-than-expected CPI inflation data on Wednesday.
Investors leave minor currencies for USD amid potential war
With the looming threat of retaliation from Iran, currencies from neighboring emerging markets, such as Hungary (HUF) and Sweden (SEK), have depreciated by more than 1% against the dollar. This movement underscores a broad shift among investors towards the perceived security of the US dollar, away from smaller, potentially more vulnerable currencies.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
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