The US Dollar strengthened on Monday as cautious investors sought refuge amid rising tensions, though the modest gains indicate that markets are awaiting Iran’s reaction to recent US strikes on its nuclear facilities, which have intensified the Middle East conflict.

On the same day, Iran declared that the US attacks broadened the scope of acceptable targets for its military and criticised US President Donald Trump, labelling him a “gambler” for supporting Israel’s military actions against the Islamic Republic.

The biggest market fluctuations occurred in oil, with crude prices reaching a five-month peak before pulling back to trade lower by the end of the day, Reuters reports.

The greenback strengthened by 1% against the Yen, settling at 147.450, marking its highest level since 15^th May.

Bank of America strategists noted that the Dollar/Yen exchange rate could rise further if oil prices stay high, given that Japan imports nearly all its petroleum, over 90% of which comes from the Middle East, while the US remains largely energy-independent.

Elsewhere, the Euro held up relatively well, slipping only 0.2% to $1.14965 and remaining steady after preliminary eurozone PMIs showed the economy stagnated for the second consecutive month in June.

Slight improvements in the UK’s flash PMIs also appeared but had little impact on the British Pound, which last traded at $1.34385, down just 0.1% against the Dollar.

Furthermore, the Australian Dollar, commonly viewed as a gauge of risk sentiment, dropped to a one-month low, declining 0.52% to $0.64180. The New Zealand Dollar also weakened, falling 0.68% to $0.5926.

As a result, the Dollar index, which tracks the greenback against six major currencies, rose 0.15% to 99.065.

Carol Kong, currency strategist at the Commonwealth Bank of Australia, said markets are currently in a wait-and-see stance regarding Iran’s response, with greater concern about the conflict’s potential to drive inflation higher than its possible negative effects on the economy.

“The currency markets will be at the mercy of comments and actions from the Iranian, Israeli and US governments. The risks are clearly skewed to further upside in the safe-haven currencies if the parties escalate the conflict,” Kong stated.

Although the Dollar has regained its status as a safe haven amid the recent surge in geopolitical tensions, the modest market reactions suggest that investors are still hesitant to fully commit to the greenback.

This year, USD has fallen 8.6% against major currencies, as economic uncertainty stemming from President Trump’s tariffs and concerns over their impact on US growth have driven investors to seek other options.