Dollar Surges Amid Middle East Conflict and Market Uncertainties

The U.S. dollar maintained significant gains after Iran's missile attack on Israel prompted a shift to safe-haven assets. Oil prices and economic data influenced market movements. The euro dropped due to anticipation of ECB rate cuts, while other currencies showed varied responses. The spotlight is on upcoming U.S. employment data.

The U.S. dollar hung onto its notable gains from the past week on Wednesday following Iran's missile attack on Israel, which spurred investors to seek safe-haven assets amidst escalating Middle East tensions. The euro remained steady against the dollar at $1.1069, recovering slightly after its sharpest decline in nearly four months, plummeting 0.6% on Tuesday.

The U.S. dollar index, which measures the currency against a group of major counterparts, held firm at 101.25, following a 0.5% rise on Tuesday. Iran declared its missile attack on Israel, its most significant military action against the country, concluded unless further provoked. Meanwhile, Israel and the U.S. signaled retaliation against Tehran.

In response to Middle East turmoil, market focus has been on oil prices. "Oil prices seem to be the market's primary focus right now, although Brent crude is still at $75 a barrel, significantly lower than pre-summer levels," said Jane Foley, head of FX strategy at Rabobank. The market juggles concerns over oil prices, the Fed, and the broader U.S. economy.

(With inputs from agencies.)