Last Saturday, the Trump administration, in collaboration with Israel, attacked Iran’s political leadership, killing Ayatollah Khamenei. Iran retaliated with counterattacks. Both sides are displaying belligerent stances, with flashpoints spreading across the Middle East. A resolution remains elusive.

Markets had been leaning toward a scenario where the third round of U.S.-Iran nuclear talks would somehow avoid a deadlock and continue. However, the reality is proving harsh. Looking at the foreign exchange market, after opening with a gap in the direction of a stronger dollar in the early week Oceania session, movements have since stabilized.
Nevertheless, the dollar index remains at a stronger level than last weekend. Crude oil futures, which surged sharply in response to the Middle East crisis, have paused but remain elevated, with caution still prevailing. Looking ahead, the risk of further escalation in attacks from both sides means the pressure for safe-haven dollar buying is likely to persist.
Should signs emerge that the situation is moving towards resolution, position adjustments may occur, necessitating close monitoring of news developments for the time being. Mid-term, globally heightened inflationary pressures are anticipated due to high oil prices and supply chain disruptions. The risk of impacts exceeding those seen at the onset of the Ukraine war must also be considered. An early resolution to the situation is eagerly awaited.