The US dollar is expected to have its best-performing month since 2022.

As the Middle East conflict disrupts energy markets, rattles economic forecasts, and prompts investors to flock to major reserve currencies, the U.S. dollar is expected to post its best month since September 2022.

Driven by safe-haven flows, the Bloomberg Dollar Spot Index is up about 3% this month. The U.S.—the world’s largest oil producer—has also supported the dollar’s performance as global energy prices have surged. Meanwhile, weakening expectations for global economic growth have further aided the dollar.

“Because global economic growth expectations have weakened, the dollar has strengthened due to safe-haven demand,” said Noah Buffam, a strategist at CIBC Capital Markets.

Since global energy markets have been roiled—especially after the closure of the Strait of Hormuz—investors have grown more inclined toward the U.S. dollar, as this highlights Europe’s and Japan’s reliance on oil and natural gas imports. Traders who had bet on a weaker dollar before the outbreak of the conflict have quickly unwound positions. At present, their dollar long bets in the derivatives market have exceeded $7 billion, the highest since December of last year.

Wall Street banks that were previously bearish on the dollar—including JPMorgan Chase and Goldman Sachs—are re-evaluating their stance on the greenback. However, the day-to-day swings in global risk sentiment and news headlines make it extremely difficult to update forecasts.

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Editor: Yu Jian SF069