Dollar Draws Safe-Haven Bids After Strait of Hormuz Incident

The incident raises the risk premium for oil-linked currencies. The Strait of Hormuz is a chokepoint for crude shipments. The yen, traditionally a safe-haven beneficiary, gained 0.1% against the dollar. That was a smaller move than the broad dollar advance.

The dollar's rally tests the 105.50 resistance level on the DXY index, a level that held through most of June. A break above it would open room toward 106.00, traders said. The euro faces support at 1.0850, the May low.

The ECB forum will shape near-term direction for the euro. Markets expect Lagarde to stick to her cautious tone on rate cuts after the June meeting cut rates by 25 basis points. Any hint of a September move would pressure the euro further.

U.S. payrolls will be the main event. Consensus expectations point to a moderation from the May print. A number above 200,000 would reinforce the Fed's hold. A soft print would revive bets on a September rate cut. The dollar's reaction will depend on the mix of headline jobs, wages, and participation.

The week begins with geopolitics setting the tone. The dollar's safe-haven bid fits a pattern of geopolitical risk reshaping FX playbook. Risk appetite will follow the data.