The US dollar is climbing against many currencies. This rise is slow and is influenced by several news events. President Trump has called for an immediate evacuation of Tehran. However, the White House has downplayed this, saying it’s meant to encourage Iran to negotiate. Trump is also leaving the G7 summit early to head back to Washington, D.C. Fox News reports that Trump has told the National Security Council to be ready in the Situation Room. These events might affect market stability in different ways. What we see now are clear signals from Washington that add geopolitical risk, causing a gradual increase in the dollar as traders assess the situation. The President’s comments about Tehran and his sudden exit from the summit create a sense of rising tension, regardless of any future actions. Despite the White House trying to soften the impact of these remarks, markets often react to tone and timing rather than intentions. This shift has led to a cautious move towards the dollar. When investors feel uncertain about global conflicts, they often prefer to invest in a stable currency, especially when actions seem sudden or aggressive. The news that senior advisers are gathered in the Situation Room does not go unnoticed by the markets. While it doesn’t mean immediate action is likely, it suggests that some decisions might be under careful review. Traders remember that past meetings like this have often led to policy changes, which can create a directional bias. In previous instances where similar statements were made without follow-up action, we saw temporary swings in FX volatility. But currently, the situation is still unfolding. The signals from policy staff and the President’s changing schedule are more significant right now. The worry isn’t just about potential conflict; it’s about how quickly the markets are adjusting to uncertainties. For now, volatility risk premiums might stay high, especially with JPY and CHF trades, which often gather safe-haven interest when headlines spur defense-related purchases. Calendar spread traders may notice that implied volatility stays higher than realized unless tensions ease. Trading desks should be cautious and not oppose these moves for the moment. While the dollar’s current strength reacts to news rather than follows a trend, a lack of clarity about future scenarios could put pressure on positioning. Delta exposure might need more careful adjustments, especially if liquidity drops in less active pairs. As we navigate this time, we’re exercising caution and using high-frequency indicators to monitor shifts in G10 positioning. Pay attention to intraday technicals, but treat them as explorative rather than definitive. Also, keep a close eye on forward points: forward premiums show a dollar-positive shift across several Asian currencies, indicating that hedging demand is also a factor—not just spot activity. Unless new messages help stabilize the current rhetoric, expect active and varied tactical positioning, with price-driven entries prevailing over medium-term conviction trades.

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