The U.S. dollar climbed to one-week highs against major currencies on Monday before paring some gains, as renewed U.S.-Iran tensions and fading hopes for a Middle East peace deal drove investors toward safe-haven assets.

The United States stated on Sunday that it had seized an Iranian cargo ship that attempted to break the blockade, while Iran announced it would retaliate, sparking fears of a resumption of hostilities.

Tehran also announced it would not participate in a second round of negotiations that the U.S. had hoped to launch before the expiration of the two-week ceasefire with Iran on Tuesday.

Charu Chanana, head of investment strategy at Saxo, said:

"The weekend escalation revives the geopolitical risk premium just as markets were starting to price in peace gains," adding that the rise in oil prices "is not just an energy story, it is also a growth and interest rate story."

In latest trading, the euro fell 0.05% to $1.1754, after hitting a one-week low of $1.1729 earlier in the session, while the British pound declined 0.15% to $1.3497. The risk-sensitive Australian dollar also dropped 0.3% to $0.7145.

The dollar index, which measures the U.S. currency against a basket of six peers, rose to a one-week high of 98.47 before retreating to 98.34.

The index remains down 1.55% during April, after having jumped 2.3% in March driven by safe-haven demand following the outbreak of the war.

Analysts noted that the relatively limited movements in the currency market, with the dollar retreating from some of its early gains, suggest some remaining optimism that a solution is still possible despite the weekend setbacks.

Chris Weston, head of research at Pepperstone, said:

"While the market tone leans toward risk aversion at the start of the week, the moves so far appear orderly and not indicative of a major volatility shock."

He added: "Market participants realize the path toward a formal agreement will not be linear and will remain subject to sudden changes, so a shift in sentiment would not be entirely surprising."

Markets focus on the Strait of Hormuz

The war has entered its eighth week and has caused the most severe energy supply shock in history, leading to rising oil prices as a result of the effective closure of the Strait of Hormuz, through which about one-fifth of global oil supplies typically pass.

The United States continues to impose a blockade on Iranian ports, while Iran has lifted and then reimposed its blockade on maritime traffic through this vital waterway.

This led to a rebound in oil prices on Monday, with Brent crude contracts jumping by more than 6% to $95.92 per barrel, while U.S. West Texas Intermediate (WTI) rose to $89.29 per barrel, a 6.5% increase.

Nick Twidale, chief market strategist at ATFX Global in Sydney, said:

"The Strait of Hormuz remains the fundamental factor for many, and hopes for the U.S. and Iran sitting at the negotiating table before the ceasefire expires now seem remote."

He added: "For now, I believe we will see further declines in risk assets in the coming sessions."

Japanese yen under pressure

The Japanese yen declined to 158.96 per dollar, although it remains below the critical 160 level that traders fear could prompt authorities to intervene to support the currency.

Silver prices lost more than 2.5% in the European market on Monday, moving away from five-week highs due to active correction and profit-taking, alongside pressure from a rising U.S. dollar fueled by renewed geopolitical tensions in the Middle East.

The U.S. Navy's seizure of an Iranian cargo ship has escalated tensions between the United States and Iran over control of the Strait of Hormuz, while Tehran continues to refuse participation in a new round of negotiations scheduled for later today in Pakistan.

Price Overview

- Silver Prices Today: Silver metal prices fell by 2.65% to ($78.65), from an opening level of ($80.78), which also marked the daily high.

- Upon price settlement on Friday, silver prices achieved a 0.3% increase, marking the first gain in three days and hitting a five-week high of $83.06 per ounce following Iran's announcement to open the Strait of Hormuz.

- Last week, silver surged by 6.4%, marking its fourth consecutive weekly gain, supported by the Iranian war truce and improved market sentiment.

The U.S. Dollar

The dollar index rose 0.15% on Monday, extending its gains for a third consecutive session and reaching its highest level in nearly a week. This reflects the continued ascent of the American currency against a basket of global currencies.

The rise is driven by renewed safe-haven buying of the U.S. dollar amid escalating U.S.-Iran tensions and diminishing prospects for a Middle East peace agreement.

Charu Chanana, head of investment strategy at Saxo, noted that the weekend escalation has revived the geopolitical risk premium just as markets had begun to price in potential peace gains.

Iranian War Updates

- The Iranian Navy announced the re-closing of the Strait of Hormuz as of Saturday afternoon until the U.S. blockade on Iranian vessels is lifted.

- U.S. President Donald Trump stated that the U.S. Navy intercepted the Iranian-flagged cargo ship "Tosca" in the Gulf of Oman.

- Tehran labeled the attack on the ship an "act of maritime piracy" and a flagrant violation of the ceasefire agreement, vowing to retaliate.

- While Islamabad prepares to host a second round of peace negotiations today, Iran has so far refused to participate.

- International and regional parties are pressuring Tehran to join the talks before the two-week ceasefire expires tomorrow, Tuesday.

Global Oil Prices

Global oil prices surged by more than 5% on Monday, staging a strong recovery from four-week lows as fears of supply disruptions from the Arabian Gulf resurfaced following the re-closing of the Strait of Hormuz.

Rising oil prices are renewing concerns over accelerating inflation, which could prompt global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of rate cuts or prolonged pauses.

U.S. Interest Rates

- According to the CME Group's FedWatch tool: the probability of keeping U.S. interest rates unchanged at the April meeting is currently priced at 99%, while the probability of a 25-basis-point hike stands at 1%.

- Investors are closely monitoring upcoming U.S. economic data to re-evaluate these expectations.

Gold prices lost nearly 2% in the European market on Monday at the start of the week's trading, retreating from a four-week high due to active correction and profit-taking, combined with pressure from the rising U.S. dollar in the foreign exchange market.

The U.S. Navy's seizure of an Iranian cargo ship led to escalating tensions between the United States and Iran over control of the Strait of Hormuz, with Tehran continuing to refuse participation in a new round of negotiations scheduled to be held in Pakistan later today.

Price Overview

- Gold Prices Today: Gold metal prices fell by approximately 2.0% to ($4,737.15), from the opening level of ($4,829.31), and recorded a high of ($4,829.31).

- Upon price settlement on Friday, gold prices achieved an increase of 0.85%, marking the first gain in three days and hitting a four-week high of $4,890.78 per ounce after Iran's announcement to open the Strait of Hormuz to global navigation.

- Last week, the precious metal "gold" achieved an increase of 1.7%, marking its fourth consecutive weekly gain, thanks to the Iranian war truce and improved market sentiment.

The U.S. Dollar

The dollar index rose on Monday by 0.15%, extending its gains for the third consecutive session and reaching its highest level in nearly a week, reflecting the continued ascent of the American currency against a basket of global currencies.

This rise comes amid renewed buying of the U.S. dollar as a safe haven, given the escalating tensions between the United States and Iran and the weakening chances of reaching a peace agreement in the Middle East.

Charu Chanana, head of investment strategy at Saxo, stated: The weekend escalation has revived the geopolitical risk premium just as markets began to price in peace gains.

Iranian War Updates

- The Iranian Navy announced the re-closing of the Strait of Hormuz as of Saturday afternoon until the U.S. blockade on Iranian ships is lifted.

- U.S. President Donald Trump stated that the U.S. Navy intercepted the Iranian-flagged cargo ship "Tosca" in the Gulf of Oman.

- Tehran considered the attack on the ship an "act of maritime piracy" and a flagrant violation of the ceasefire agreement, vowing to respond to this escalation.

- While the Pakistani capital, Islamabad, prepares to host a second round of peace negotiations later today, Iran refuses to participate in this round so far.

- Several international and regional parties are pressuring Tehran to participate in the peace negotiations before the two-week ceasefire agreement expires tomorrow, Tuesday.

Global Oil Prices

Global oil prices rose on Monday by more than 5% as part of a strong recovery from a four-week low, amid renewed fears of supply disruptions from the Arabian Gulf region, especially after the re-closing of the Strait of Hormuz to oil tankers.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may prompt global central banks to raise interest rates in the near term—a sharp shift from pre-war expectations of cutting or holding rates steady for a long period.

U.S. Interest Rates

- According to the FedWatch tool of the CME Group: the pricing of the probabilities of keeping U.S. interest rates unchanged at the April meeting is currently stable at 99%, and the pricing of the probabilities of raising interest rates by about 25 basis points is at 1%.

- In order to re-price those probabilities, investors are closely following the release of more economic data from the United States.

Gold Performance Expectations

Market strategist Ilya Spivak said: Gold prices fell today after the U.S.-Iran ceasefire, which markets celebrated last week, appeared to be collapsing.

Christopher Wong, a strategist at OCBC Bank, stated: In the meantime, we still expect the gold trading trend to be influenced by general risk sentiment, and this depends heavily on the results of the ceasefire talks.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased on Friday by about 7.71 metric tons, marking the fourth consecutive daily increase and bringing the total to 1,060.62 metric tons, which is the highest level since March 19.

The euro declined in European markets on Monday against a basket of global currencies, extending its losses for the third consecutive day against the U.S. dollar and moving further away from a two-month high amid ongoing correction and profit-taking.

This follows renewed buying of the U.S. dollar as a preferred alternative investment, amid escalating tensions between the United States and Iran over control of the Strait of Hormuz and Tehran's continued refusal to participate in a new round of negotiations scheduled for later today in Pakistan.

The current rise in global oil prices is increasing signs of growing inflationary pressures on policymakers at the European Central Bank (ECB), strengthening the probability of European interest rate hikes this year.

Price Overview

- Euro Exchange Rate Today: The euro fell against the dollar by 0.3% to ($1.1728), from today's opening price of ($1.1762), and recorded a high of ($1.1763).

- The euro ended Friday's trading down by 0.15% against the dollar, marking its second consecutive daily loss due to correction and profit-taking from a two-month high of $1.1849.

- Last week, the euro achieved a gain of 0.35% against the dollar, its third consecutive weekly gain, driven by the Iranian war truce and hopes of reaching a peace agreement.

The U.S. Dollar

The dollar index rose on Monday by 0.15%, extending its gains for the third consecutive session and reaching its highest level in nearly a week, reflecting the continued ascent of the American currency against a basket of global currencies.

This rise is fueled by renewed buying of the dollar as a top alternative investment, given the escalating tensions between the U.S. and Iran and the diminishing chances of a Middle East peace agreement.

Charu Chanana, head of investment strategy at Saxo, stated: The weekend escalation has revived the geopolitical risk premium just as markets began to price in peace gains.

Iranian War Updates

- The Iranian Navy announced the re-closing of the Strait of Hormuz as of Saturday afternoon until the U.S. blockade on Iranian ships is lifted.

- U.S. President Donald Trump stated that the U.S. Navy intercepted the Iranian-flagged cargo ship "Tosca" in the Gulf of Oman.

- Tehran labeled the ship's interception an "act of maritime piracy" and a flagrant violation of the ceasefire agreement, vowing to respond.

- While Islamabad prepares to host a second round of peace negotiations today, Iran refuses to participate so far.

- International and regional parties are pressuring Tehran to join negotiations before the two-week ceasefire expires tomorrow, Tuesday.

Global Oil Prices

Global oil prices rose on Monday by more than 5%, staging a strong recovery from a four-week low amid renewed fears of supply disruptions from the Arabian Gulf, particularly following the re-closing of the Strait of Hormuz.

Rising oil prices renew fears of accelerating inflation, which may prompt global central banks to raise interest rates in the near term—a sharp pivot from pre-war expectations of cutting or holding rates steady.

European Interest Rates

- With the rebound in global oil prices, money market pricing of the probability of the ECB raising rates by 25 basis points in April rose from 15% to 20%.

- Investors await more eurozone economic data on inflation, unemployment, and wages to re-price these probabilities.

- ECB President Christine Lagarde stated the bank is prepared to raise rates even if the expected inflation spike is short-term.

- Sources told Reuters that the ECB is likely to begin discussing rate hikes during this month's meeting.