On Friday, the foreign exchange markets were in turmoil. The Euro tumbled against the US Dollar, while the British Pound took a sizable punch. The EUR/USD pair slipped toward the 1.1500 mark, reflecting investors’ heightened risk aversion amid escalating geopolitical tensions in the Middle East.
In the second half of the trading day the EUR/USD started to break down further, continuing its daily loss. USDCAD’s subsequent fall reflected a move that most traders followed, as they grew more risk-averse. As everyone else is waiting for the near-term US sentiment data, the environment is pretty tense across the markets.
At the same time, the GBP/USD currency pair returned under the 1.3550 figure, losing all of the advance registered earlier this week. Strong demand for the US Dollar has sent the Pound Sterling tumbling. This demand is largely fueled by the present innovation-skeptical climate.
“GBP/USD tumbles below 1.3550 as USD benefits from souring risk mood” – FXStreet
Fears of increasing international conflict, notably between Israel and Iran, have sparked a recent major drop. As a result, investors are heading toward the safety of the US Dollar. This trend has dramatically altered the market landscape. Because of this, the Euro and Pound are being crushed on the forex scene against the mighty USD.
As market participants digest news and updates surrounding the Israel-Iran conflict, they remain vigilant for any developments that could further influence currency valuations. The flight to safety USD was extreme, highlighting the USD as a safe haven during periods of geopolitical risk off the table.