US Dollar falls even as failed talks and Hormuz shutdown spark risk-off wave

The US Dollar Index (DXY) fell on Monday, as markets digest headlines of failed Iran-United States (US) peace talks over the weekend and reports that US President Donald Trump moved the US Navy to close the Strait of Hormuz, a development that would typically fuel a strong safe-haven bid for the Greenback.

However, price action suggests that the USD is declining as investors reassess the escalation’s durability and credibility, particularly after Iran indicated it might reduce uranium enrichment, suggesting a potential off-ramp.

The EUR/USD pair is pushing higher near the 1.1765 price region, benefiting from the softer US Dollar (USD). In the absence of Eurozone data, the move is largely a Greenback-driven correction rather than a reflection of Euro strength.

The GBP/USD pair is on a week-long winning streak near the 1.3500 level, supported by the weaker USD backdrop. The British Pound is capitalizing on the shift in flows away from the Greenback.

The USD/JPY pair is edging lower toward 159.30, with the Japanese Yen gaining modest ground. Unlike the previous two sessions, the Yen is now outperforming the USD as the latter loses its safe-haven appeal.

The AUD/USD pair surged toward the 0.7090 price region as risk sentiment stabilized marginally and the USD weakened.

West Texas Intermediate (WTI) Oil fell to $98.90 per barrel, even as concerns about the Strait of Hormuz being shut rose earlier in the day.

Gold (XAU/USD) is trading near the $4,730 level, muted amid investor focus on riskier assets.