The DXY index, which tracks the performance of the US dollar, reached a yearly high of 99.84 on Monday. It is flirting with the 100 range and is most likely to reach there in the trading session. The index rose 1.92% since the war broke out between Iran and Israel as traders exited from the broader stock market. The conflict is likely to continue as Iran is on the offensive, and the US could be planning for bigger strikes.

Foreign and institutional funds pulled out billions from the Asian stock market, and the sell-off continues on Monday. India’s Sensex, Japan’s Nikkei, Hong Kong’s Hang Seng, and Singapore’s SXG are bleeding profusely in the charts. In addition, gold prices plunged by 6%, while silver fell more than 5%. Only the US dollar remains in the green, defying all odds in the charts.

Also Read: Why Gold Prices Are Dropping Fast And What Comes Next

US Dollar Rises Amid Middle East Conflict

The US dollar is the only beneficiary of the growing conflict in the Middle East. Leading currencies such as the euro, pound, and the yuan are trading in the red in the forex charts. The euro fell 0.38% to $1.1526, and the yen weakened 0.22% to 159.55 per dollar. Sterling dipped 0.37% to $1.329.

“If markets price a US tightening cycle, the US dollar will lift strongly against all currencies in our view,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia. “AUD would fall against most, if not all, major currencies if global downgrades occur,” he said.

Rodrigo Catril, a currency strategist at National ⁠Australia Bank, explained that investors are now seeking economies that can withstand the supply shock. The US dollar is withstanding the market’s whiplash while other leading currencies are folding. This puts the USD in the spotlight as the DXY index is delivering results, while other assets are not.

“The market’s going with the idea that those countries and economies that enjoy a positive supply shock from energy are likely to ​perform better than those that are suffering from a negative supply shock,” he said. “So you’re seeing the euro and the yen struggling to perform. And again, if this conflict proves long-lasting, you would think ​that those are the currencies that are likely to suffer a bit more.”