US Dollar Holds Steady Against Israeli Shekel Amid US-Iran Tensions and Rising Oil Prices

The US dollar remained stable at 3.06 Israeli shekels on Thursday, nearly unchanged from Wednesday's 3.061 shekels. The euro traded slightly higher at 3.497 shekels compared to 3.491 shekels previously. Yossi Mansha, CEO of Altshuler Shaham Financial Services, noted that foreign exchange trading continues to be influenced by geopolitical developments, energy prices, and US interest rate expectations. Rising oil prices have reignited inflation concerns, supporting US Treasury yields and helping the dollar maintain strength against most currencies globally. Despite this, the Israeli shekel showed relative stability, buoyed by positive local market sentiment and gains on the Tel Aviv Stock Exchange. Investors are closely watching the US corporate earnings season, especially technology giants, which could impact market risk appetite and currency trading. High volatility in the forex market is expected to persist amid ongoing uncertainty about inflation, interest rates, and regional tensions.

Globally, the dollar was mostly steady on Thursday as renewed US-Iran tensions kept investors cautious and supported demand for the safe-haven currency. The Japanese yen hovered near a 40-year low with little sign of recovery. The US Dollar Index, measuring the dollar against a basket of currencies including the yen and euro, remained unchanged at 101.11. The dollar's strength was driven by escalating conflict between Washington and Tehran, which pushed Brent crude oil prices up by over 1.3% to $95.31 per barrel. This followed US military strikes against Iran and claims by Iran-backed Houthi forces of attacks on two Saudi oil tankers, raising risks of further disruptions to oil flow through the Red Sea.

US two-year Treasury yields hit a 17-month high on Wednesday amid inflation fears fueled by rising oil prices, increasing the likelihood of Federal Reserve interest rate hikes. Joseph Capurso, head of international economics and FX at Commonwealth Bank of Australia, highlighted that lower oil and gas inventories raise the risk of shortages as the conflict continues, exacerbating the economic impact of high energy prices and benefiting the dollar.

The euro edged up 0.02% to $1.1412 ahead of the European Central Bank's meeting, where rates are expected to remain unchanged but with a strong possibility of hikes in September due to renewed energy price pressures. The Australian and New Zealand dollars weakened slightly against the US dollar, while the British pound traded at $1.3373.

The Japanese yen showed minimal recovery, strengthening 0.02% to 163.1 yen per dollar but then retreating after reports that Bank of Japan officials are open to faster-than-expected rate hikes amid inflation risks. The yen hit a low of 163.23 per dollar on Tuesday, its weakest since December 1986, as investors adjusted to a changing policy environment under Prime Minister Sanae Takaichi. Despite verbal warnings from Japan's finance minister and market interventions earlier this year, the yen remains weak due to a strong dollar and Japan's low interest rates. Market analyst Tony Sikmore from IG Australia suggested that despite ongoing threats, Japanese authorities are unlikely to intervene before the upcoming Federal Open Market Committee meeting next week.