The opening of a new front in the conflict between Israel and Iran has brought geopolitical risk straight back into the foreign exchange calculus. After the Israeli strikes Friday morning, the dollar witnessed an element of the “flight-to-safety” characteristic traditionally associated with military escalation but as ING points out in its daily research note,

"Expectations of fewer previously expected ECB rate cuts have lent some support to the euro," said Carol Kong, a currency strategist at Commonwealth Bank of Australia. That contrasts with the likely resumption of a Fed easing cycle later this year, and as Trump has repeatedly called for U.S. rates to be lowered.

The US Dollar has surged against major currencies in the world while the conflict in the Middle East between Israel and Iran continues to increase.

The dollar plunged on Thursday after US President Donald Trump threatened higher unilateral tariffs on trade partners, and oil see-sawed as traders evaluated the probability behind reports that Israel

Stock markets and the dollar retreated Thursday after US President Donald Trump threatened higher unilateral tariffs on partners in the coming weeks, reigniting trade war fears