Is the dollar really still the safest haven in the world, or has that belief been more myth than reality for years? The question is no longer rhetorical: in recent days, as the world watched the attacks in the Persian Gulf, markets responded with a clarity that left no room for interpretation.
In just 48 hours, the dollar index advanced 0.7%, the euro fell 1% to 1.1690 dollars, and the Japanese yen lost 0.8% against the greenback. Capital flows did not seek the yen, did not seek the Swiss franc exclusively, and certainly did not seek the currencies of energy-importing countries. They sought the dollar.
The Dollar and the Shock Nobody Expected in March
The conflict between the United States, Israel, and Iran that erupted in late February 2026 generated a first-order geopolitical shock. Qatar and Saudi Arabia shut down gas and oil plants following drone attacks, and the WTI barrel jumped 6.3% to $71.23, the largest surge so far this year.
That energy movement activated a historical mechanism: when oil rises due to geopolitical tension, the dollar strengthens. The reason is structural. The United States is the world’s largest crude oil producer, while Europe and much of Asia depend on imports, which deteriorates their terms of trade and weakens their currencies against the greenback.
Why the Petrodollar Resurges in Times of Crisis
The petrodollar system — the tacit agreement by which oil is priced and settled in dollars — has not died, although many had given it up for dead. When geopolitics tightens, that system reasserts its strength: Gulf producer states receive dollars for their crude, and those dollars seek a destination in assets denominated in the same currency.
MUFG analysts recall that in the 2022 energy shock, following the invasion of Ukraine, the dollar index strengthened by nearly 20% between February and September. This episode will not reach that magnitude, they acknowledge, but the precedent illustrates the upside potential of a currency that remains the world’s preeminent global reserve currency.
How Gulf Markets Reacted
Gulf countries, whose sovereign wealth funds manage trillions in global assets, face an unprecedented dilemma. On one hand, their currencies are pegged to the dollar — the UAE dirham, the Saudi riyal — which gives them immediate stability but also exposes them directly to Washington’s monetary policy. On the other hand, a prolonged escalation threatens their own energy infrastructure.
The immediate result has been a return to defensive positions in dollar-denominated assets: U.S. Treasury bonds and liquidity in the American currency. Goldman Sachs put it plainly: “in an environment of lower risk appetite and rising oil prices, the dollar should remain the preferred safe haven.”
The European Dilemma Amid Dollar Strengthening
For the Spanish investor, dollar appreciation has a bitter side and a strategic reading. The bitter side is inflation: if oil rises in dollars and the euro falls, imported energy becomes more expensive in Europe. Funcas estimates that, with oil sustained around $80, Spain’s CPI could reach 3.2% in 2026, compared to the 2.4% forecast at the start of the year.
The strategic reading is different. Those with dollar-denominated assets or investments in markets tied to the greenback — such as real estate in the United Arab Emirates, where the dirham remains pegged to the dollar — are seeing their wealth in euros appreciate simply due to the exchange rate.
| Currency / Asset | Movement vs. Dollar (crisis onset) | Reading for the Investor |
|---|---|---|
| Euro / USD | -1% (to 1.1690) | Makes European imports more expensive |
| Japanese Yen | -0.8% (to 157.36) | Loses its classic defensive status |
| Swiss Franc | Moderate appreciation | Remains a secondary safe haven |
| Gold (oz) | +0.8% (to $5,322) | Complementary asset, not a substitute |
| U.S. Treasury Bond (10-year) | Yield rises to 4.03% | Safe-haven flow with inflationary pressure |
The Dollar in 2026: Forecast and Positioning Advice
Analysts at ING, MUFG, and Goldman Sachs agree that the dollar will maintain its dominant position as long as the Gulf conflict has no clear resolution. The base scenario envisions a moderate and sustained appreciation of the greenback, without reaching the 20% of 2022, but with upside potential if the crisis escalates or if the Federal Reserve delays rate cuts due to energy inflationary pressure.
The advice from fund managers is clear: diversify into dollar-denominated assets without overweighting, maintain exposure to gold as a complement, and monitor the spread between the 10-year Treasury and the German Bund as a gauge of the confidence differential between the two sides of the Atlantic. The dollar does not need the world to love it; it only needs the world to need it — and right now, the world needs it.
