Iran Attack Shakes Currency and Oil Markets Amid Middle East Tensions

The US attack on Iran has once again unsettled the foreign exchange and oil markets, which have yet to stabilize following recent regional tensions. As of the morning of July 9, 2026, the US dollar traded at approximately 3.0428 shekels, the euro at 3.4768 shekels, and the euro-dollar rate stood at 1.1430. The US Dollar Index (DXY) hovered around 101 points. Oil prices remain elevated due to concerns over potential disruptions in shipping through the strategic Strait of Hormuz, with Brent crude near $78 per barrel and WTI around $73.5 per barrel.

According to Yossi Menashe, co-CEO of Altshuler Shaham Financial Services, the local currency market is primarily influenced by the global dollar trend combined with Middle Eastern security developments. He noted that as long as oil prices stay high and investors price in risks of shipping interruptions in the Strait of Hormuz, volatility in the shekel will persist. However, any signs of renewed US-Iran negotiations could reduce risk premiums and support the local currency.

The Tel Aviv Stock Exchange closed mixed on July 8, with the TA-35 index rising slightly by 0.03% to 4,087.17 points, while the TA-90 index fell 1.02% and the banking index dropped 0.64%. US markets also showed mixed results: the S&P 500 declined 0.28%, the Dow Jones fell 1.09%, and the Nasdaq gained 0.20%, buoyed by strength in technology stocks. European markets experienced sharper declines, with the STOXX Europe 600 down 1.8%, amid rising bond yields and concerns over Middle East developments. Notably, German 10-year bond yields reached their highest levels in weeks, and French yields rose to levels unseen since 2009 due to a combination of yield increases and political issues.

The Federal Reserve's meeting minutes released the previous evening conveyed a relatively balanced outlook. Menashe highlighted that most committee members expect inflation pressures to ease in the medium term. He added that unless energy price increases become prolonged, markets still anticipate the Fed's next move to be a rate cut rather than a hike.

Looking ahead, market focus will remain on Middle East developments and their impact on oil prices, currency markets, and investor risk appetite. Additionally, US weekly unemployment claims data and the European Central Bank's meeting minutes are scheduled for release, with speeches from Fed and ECB officials potentially offering further clues on future interest rate policies.