The dollar, a safe-haven currency, firmed up on Monday after peace talks broke down between the U.S.A. and Iran and the American Navy prepared to?blockade Iranian ports. Meanwhile the Hungarian forint rose after the centre-right Tisza Party defeated Viktor Orban by a large margin.

Both the euro and British pound were up 0.2% at $1.1694, but both were still above their previous lows. The Australian dollar, which is a risky currency, was down 0.3% at $0.7052. Meanwhile, the New Zealand dollar fell 0.1% to $0.5834.

Donald Trump said on Sunday that the U.S. Navy will begin blockingading Strait of Hormuz, after talks with Iran failed. This could jeopardize a fragile ceasefire of two weeks. U.S. Central Command said U.S. Forces would begin blocking all maritime traffic into and out of Iranian ports at 10 a.m. ET (1400 GMT), Monday.

The dollar is doing well this morning, but not as much as we did earlier in the conflict, said Tommy von Bromsen. He added that the U.S.'s inability to implement sound policies could push investors away.

Due to its role as a safe haven, and because the U.S. is not exposed to the rising energy prices imported from abroad, the dollar tends to gain when tensions flare up between Iran and the U.S.

Brent crude futures returned to a price of $101 per barrel on Monday.

Commodity Futures Trading Commission data showed that in the last week, speculators increased their net long positions on the U.S. Dollar. The CFTC announced on Friday that the net position in the euro had flipped for the first since March of last year. The Hungarian Forint has surged since veteran nationalist Viktor Orban, who had been in power for 16 years, lost to Peter Magyar’s Tisza Party in Sunday’s national elections.

The dollar rose by 2.4%, to 312,36 cents. This is its highest level since February 20,22. The euro jumped over 2%.

The ING FX Strategist Frantisek taborsky said: "The constitutional major allows for a seamless transfer of power to the opposition, and a quicker path to unlocking EU Funds, which is the?main interest of investors. This gives Hungarian assets an additional reason to extend the rally."

The yen is weakening against the dollar.

Kazuo Ueda, the Governor of the Bank of Japan, said on Monday that the economic and price development was roughly in line with its forecasts. He also called for vigilance in assessing the impact of the Middle East conflict.

Analysts believe Ueda’s speech may be the BOJ's last chance to indicate whether or not it will raise interest rates in the coming weeks. Money?market traders have priced in an 8 basis point tightening at the April 28 meeting. This implies a 1 in 3 chance of a quarter point hike.

Nomura analysts wrote that "the risk of policy mistakes is relatively high in Japan, Europe and the United States. This means money will return to USD assets due to a lack of better options."

(source: Reuters)