After the recent Israel–U.S. strikes in Iran, the dollar’s rise in global currency markets has once again sparked discussion. Investors say that in times of crisis, the U.S. dollar continues to serve as a reliable safe haven.

Reports indicate that amid growing geopolitical tensions in the Middle East, the greenback has regained its traditional role as a “crisis currency,” according to Reuters.

For several months, uncertainty had surrounded the dollar. Particularly after U.S. tariffs imposed last year caused a global sell-off in equities, the dollar did not strengthen as expected. This led to questions about whether the currency’s natural appeal during crises was diminishing.

However, recent events seem to have eased those doubts. On Monday, the U.S. dollar strengthened against nearly all major currencies. The dollar index—which measures its value relative to six leading currencies—rose by nearly 1 percent, marking its largest gain in seven months.

Eric Théorêt, a foreign exchange strategist at Canada’s Scotiabank, commented, “From a dollar perspective, today was a classic safe-haven scenario. Investors avoided riskier assets and sought refuge in the dollar.”

He also noted that April 2, 2025—when former President Donald Trump imposed tariffs on goods from 157 countries, calling the day “Liberation Day”—had been a rare exception. That day triggered a major drop in global equity markets, and the dollar failed to act as a safe-haven currency.

Currently, the situation is more favorable for the dollar. Its long-standing position as a secure asset had been challenged in recent months, facing competition from the euro, yen, and gold. Typically, when gold rises, the dollar weakens—but in this instance, following the combined U.S.–Israel strikes in Iran, both gold and the dollar have increased in value.

According to GoldPrice.org, global gold prices rose by over $88 per ounce on Monday, surpassing $5,366 and potentially approaching an all-time record again. In January 2026, gold had reached a historical peak of $5,589 per ounce.

Analysts attribute the dollar’s resilience to the depth and stability of U.S. financial markets. Théorêt explained, “If you want to reduce risk on a large scale, the U.S. Treasury market is the only place that can absorb that level of exposure.” During crises, global investors naturally turn to U.S. Treasury bills and bonds, boosting demand for dollars.

Don Calcagni, Chief Investment Officer at Mercer Advisors, added, “The dollar has no true alternative, which is another major reason for its appeal. In times of uncertainty, investors find it difficult to stay away from the dollar, so I’m not surprised by its continued strength as a safe-haven asset.”

Risk Origin Matters

Analysts say last year’s volatility showed why the dollar did not attract investors as a safe-haven asset. At that time, the source of risk was the United States itself, with Washington’s tariff policies rattling global markets. When uncertainty originates from a country, investors are naturally reluctant to seek refuge in that country’s currency.

Benjamin Ford, a researcher at Macro Hive, explained that Trump’s so-called “Liberation Day” weakened the dollar and shifted investor interest toward other regions. He noted that rising oil prices are now prompting investors to pivot back to the dollar.

John Velis, macro strategist at BNY Americas, added that while domestic shocks could undermine the dollar, international and geopolitical crises tend to maintain its appeal—a trend currently visible in the markets.

Debate Continues

Not everyone is fully convinced. Jane Foley, Head of FX Strategy at Rabobank, said that while the dollar appears to have regained some of its old stature during this crisis, debate over its role is far from settled.

On Monday, the dollar benefited not only as a safe-haven asset but also because the U.S. is a net energy exporter. Rising oil prices generally impact import-dependent countries more than the U.S., giving the dollar additional support.

Aaron Hard, Senior Portfolio Manager at State Street Investment Management, cautioned that in other types of shocks unrelated to energy or liquidity, the dollar might not remain as strong. He noted that in a standard economic scare, the dollar may not always serve as an effective safe haven.

Historically, in major crises, the dollar would strengthen even as equity markets fell. But today, analysts warn that in future shocks, both the dollar and riskier assets could fluctuate together. In other words, the dollar may no longer be an automatic safe refuge in all situations.

Ford added that the dollar’s short-term trajectory will depend heavily on oil prices. If oil continues rising and investors remain risk-averse, dollar demand will likely increase. Conversely, if oil prices fall, traditionally safe currencies like the Swiss franc and Japanese yen could regain strength, providing attractive investment alternatives.