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ForexMedium•24 February 2026•

1 min read

BofA: Geopolitical Escalation with Iran Expected to Boost US Dollar

Donald Trump against maps of the US and Iran, with oil barrels, pipelines, derricks, and upward financial charts amidst flames.

Key Facts

1Bank of America expects the US dollar to benefit from any material escalation in US-Iran tensions.

2Polymarket odds of a US military strike against Iran by the end of June have risen to 69%.

Bank of America (BofA) analysts expect the US Dollar to strengthen significantly in the event of a material escalation in tensions between the US and Iran. Market sentiment is shifting, with Polymarket odds of a US military strike against Iran rising to 69% by the end of June. This potential escalation is expected to trigger a 'risk-off' environment, driving investors toward safe-haven assets. BofA specifically recommends shorting the NZD/USD pair as a strategic hedge against these geopolitical risks. The bank notes that higher oil prices and declining global equities typically favor the USD over risk-sensitive currencies like the AUD and SEK. Consequently, the DXY index is likely to see upward pressure as geopolitical uncertainty persists and safe-haven flows accelerate.