Dollar nears 10-month high as Iran war stretches into fifth week

Monday 30 March 2026 - 12:20

By: Dakir Madiha

Dollar nears 10-month high as Iran war stretches into fifth week

The U.S. dollar climbed toward a 10-month high on Monday as the war between the United States, Israel, and Iran entered its fifth week with no clear path to resolution, buoyed by safe-haven capital flows and surging oil prices that rattled global markets throughout March.

The dollar index traded around 100.2, after touching 100.54 in mid-March, its highest level since May 2025, according to Reuters. The greenback is on track for its strongest monthly performance since July 2025. Rising crude prices have paradoxically benefited the dollar, as the United States is a net exporter of crude oil, while energy-dependent economies in Europe and Asia bear the brunt of the oil shock.

The conflict, which began on February 28 with joint U.S.-Israeli strikes against Iran that killed Supreme Leader Ali Khamenei, has effectively paralyzed the Strait of Hormuz, the narrow waterway through which roughly 20 percent of global oil passes. Daily maritime traffic through the strait has fallen by 90 to 95 percent since the war began, according to maritime intelligence firm Kpler. Brent crude surpassed $116 per barrel on Monday, with prices up more than 48 percent over the past month according to Trading Economics, one of the sharpest monthly surges on record.

CNBC reported that oil executives and analysts warn that economic disruptions could intensify sharply if the strait is not reopened within one to three weeks, with Middle Eastern producers already shutting in wells due to a lack of storage capacity for crude they cannot ship. The United States and other countries have released 400 million barrels from their strategic reserves, the largest coordinated release ever recorded, while temporarily suspending sanctions on certain Russian and Iranian oil supplies.

Houthi rebels in Yemen, backed by Iran, entered the war on Saturday, firing ballistic missiles at Israel and opening a new front in the regional conflict. Houthi military spokesperson Yahya Saree said the attacks would continue until aggression against all fronts of the resistance ceases. The Houthi entry into the conflict coincided with the arrival of 3,500 additional U.S. troops aboard the USS Tripoli, alongside reports that the Pentagon is considering deploying up to 10,000 additional ground forces to the region.

President Trump told reporters aboard Air Force One on Sunday that a deal with Iran could come soon, while Secretary of State Marco Rubio said military operations should conclude in weeks, not months. Tehran rejected Washington's 15-point peace proposal, instead demanding war reparations and recognition of Iran's rights over the strait. Pakistan is hosting the foreign ministers of Saudi Arabia, Turkey, and Egypt to discuss de-escalation efforts.

The euro fell to around 1.15 against the dollar, while markets now price in nearly a 50 percent probability that the Federal Reserve could raise interest rates by December, a sharp reversal from earlier forecasts of two cuts this year. Wall Street suffered its worst single session since the start of the coronavirus pandemic last Thursday, after Iran's Revolutionary Guard declared the strait closed. A White House official pushed back against the pessimism, saying a glimmer of hope is becoming clearer and brighter and that the administration retains options to restore energy flows.