David McNamara: Dollar appeals as safe haven during Iran war

The dollar’s appeal during heightened uncertainty has interlinked with the energy price shock arising from the Middle East conflict

The dollar’s appeal as a safe haven during periods of heightened uncertainty has interlinked with the energy price shock arising from the Middle East conflict. In addition, the US economy’s relatively limited exposure to the Middle East and its position as a net oil exporter, compared to the Eurozone and UK who are net energy importers, has also worked in the dollar’s favour.

Mon, 25 May, 2026 - 13:42

David McNamara

David McNamara is the Group Chief Economist at AIB responsible for leading the bank's macroeconomic analysis and provide insights for both national and international stakeholders.

From a currency market perspective, the Middle East conflict has corresponded with a strengthening in the dollar. This represents a reversal of fortunes compared to how the greenback fared in the opening weeks of the year.

At that time, a combination of some disappointing US macro data, concerns over a government shutdown, fiscal risks, renewed trade tensions, dovish US rate expectations, as well as White House comments all weighed on the currency in early 2026. This saw EUR/USD trade briefly above the $1.20 mark to a high of $1.2078 in late January, while GBP/USD peaked at $1.3867.