The US dollar has shown continued strength, recording gains for the second week in a row, mainly attributed to the ongoing military conflict in the Middle East. Investors are flocking to the safety of the American currency, considering it a secure investment during times of geopolitical uncertainty. Additionally, US President Donald Trump has indicated a forthcoming harsh response against Iran, which further fuels the dollar's appeal in uncertain times.

Last week, the dollar index surpassed the 100 mark, rising by 0.65% and achieving weekly gains of 1.1%. In contrast, the euro fell below 1.15 against the dollar, currently standing at 1.1440 with a decline of 0.6%. The divergence between the dollar's performance and that of the euro indicates shifting investor confidence and strategic positioning in anticipation of market movements stemming from geopolitical events.

Investors are currently weighing two scenarios for the foreign exchange market: one option involves a potential return to diplomatic negotiations, which could undermine the dollar's value, making riskier assets more appealing. The other scenario foresees a continuation of military actions, which would ensure the US dollar's status as the leading safe-haven currency, reinforcing its strength against international currencies during turbulent times.