Those that claim the US dollar dominance is at risk or in decline, due to the Iran war, are completely wrong. The US dollar is becoming even more dominant in international transiations.
The US dollar's percentage of international transactions rose to a record 51.1% in March. The world is still betting on the USA as the world reserve currency. China is not an option due to capital restrictions. Europe is in economy stagnation and decline, so the Euro currency is not really an option. The "news" media is trying to sell a narrative, but the data is clear. The US dollar still dominates trade and it is growing, not declining. Source: Wall Street Mav Bloomberg
Dollar Use in Global Trade Rose to New Highs Amid War, Swift Says
Source: Bloomberg
Oil and US dollar strength move in tandem, which could mitigate inflationary pressures on import prices for America.
US oil exports to hit record as Iran war triggers race for supplies. Source: Daniel Lacalle on X, Bloomberg
Traders Turn Positive on US dollar for First Time This Year
Source: Bloomberg
Yen at a critical juncture intervention looms
The Japanese Yen is once again near 160 USD/JPY, the level that triggered massive government interventions in 2024, with trillions of yen spent to defend the currency. Top official Atsushi Mimura warns that “all possible measures” could be taken. Rising oil dependence and record gas prices are straining the economy, making a weak yen more than a market issue it threatens daily life and inflation. History shows that a break above 160 would likely trigger swift intervention. Source: Global Markets Investor, Bloomberg
The euro has sold off aggressively in the wake of the Iran war.
We briefly bounced at the range lows, but the move has been weak and lacks follow-through. Now sitting well below the 200-day moving average, with the 21-day crossing lower, a bearish shift in trend dynamics. Last time this setup played out, the euro didn’t stabilize, it continued the move lower. Source: The Market Ear, LSEG
Dollar and the oil crisis
Last time it caught strong bids and squeezed for some 6 months. A similar move would tighten financial conditions quickly. Source. TS Lombard, TME
U.S. Dollar Index $DXY now trading above its 200-day moving average by the largest margin in 12 months 🇺🇸💵📈
Source: Barchart
