The US dollar is weakening despite geopolitical tension and military uncertainty, suggesting a deeper shift in how markets perceive US assets, asserts the CEO of one of the world’s largest independent financial advisory and asset management organisations.

deVere Group’s Nigel Green is speaking out as the dollar slipped on Tuesday against most major developed-market currencies following reports that US President Donald Trump is prepared to halt military operations against Iran, even if the Strait of Hormuz remains largely restricted — a development driving renewed volatility across energy, bond and currency markets.

The move in foreign exchange markets stands in sharp contrast to the earlier phase of the crisis.

At the height of escalation, the US Dollar Index pushed above 100, reaching its strongest level in close to 10 months as investors rushed into traditional safe-haven assets amid fears of prolonged conflict and severe energy disruption.

Now, the reaction to even tentative signs of de-escalation is notably different. The dollar is weakening even though the Strait of Hormuz, which typically accounts for around 20% of global oil flows, remains constrained.

One of the most critical energy flashpoints in the world is still under pressure, yet the currency response is far less defensive.

Nigel Green comments: “The dollar is no longer responding to geopolitical stress in the way markets have come to expect.

“Even with a critical global energy artery severely disrupted, investors are stepping back from the dollar at the first serious indication that military escalation may not intensify further.”

Energy markets highlight the scale of the disruption. Brent crude surged into a $116–$126 per barrel range during the crisis, at one stage recording gains of more than 50% in a short period.

Such a move reflects the seriousness of supply constraints and the sensitivity of global pricing to developments in the region.

At the same time, global bond markets have rallied. US Treasuries have extended gains following comments from Federal Reserve Chair Jerome Powell indicating that longer-term inflation expectations remain anchored, even as higher oil prices feed into the broader economic outlook.

The combination of a softer dollar, stronger bonds and elevated oil prices marks a departure from previous crisis dynamics.

“Traditionally, geopolitical shocks of this magnitude have driven a sustained and broad-based rally in the US currency.

“In earlier periods of geopolitical stress, from the Gulf War through to the initial stages of the Ukraine conflict, the dollar strengthened consistently as global capital moved rapidly into US assets,” the deVere CEO notes.

“What we’re seeing now is far more conditional. The demand for the greenback appears to be fading faster, and that points to a shift in how investors are allocating capital under stress.”

The data supports this change in behaviour. During earlier escalations in the current crisis, the dollar index rose by roughly 2–3% over a matter of weeks as markets priced in a prolonged disruption and rising inflation risks.

Those gains are now being unwound even though the underlying drivers of uncertainty have not fully eased.

Inflation remains a central concern. Elevated energy prices have the potential to push US inflation back toward the 4% range if supply constraints persist, yet currency markets are showing less inclination to treat the dollar as the primary hedge against that risk.

Nigel Green says: “Investors are increasingly separating short-term geopolitical headlines from longer-term macro positioning.

“The idea that any form of geopolitical tension automatically delivers sustained dollar strength is being tested.”

Monetary policy expectations are also playing a role. Markets are leaning toward the prospect of rate cuts rather than further tightening, even in the face of higher oil prices, as policymakers signal confidence that inflation expectations remain under control.

At the same time, the structure of global energy markets has evolved.

The US is now a major energy producer and exporter, reducing the extent to which global oil flows mechanically reinforce demand for the dollar in the way they once did.

“Safe-haven demand is becoming more diversified,” Nigel Green adds.

“Investors are allocating across currencies, commodities, and fixed income rather than defaulting exclusively to the dollar as they perhaps once would have done.”

The implications are wide-ranging. A more structurally balanced currency environment could support emerging markets, sustain commodity strength and alter the direction of global capital flows.

Risks remain elevated.

The Strait of Hormuz remains under pressure, shipping flows are still disrupted, and energy markets continue to reflect a fragile equilibrium.

The deVere chief executive concludes: “The behaviour of the dollar is offering a clear signal: long-established crisis patterns in global markets are starting to evolve.”