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Macro EconomyMedium•16 March 2026•

1 min read

Middle East Conflict Boosts USD and Energy Prices Amid Limited Upside Forecasts

An industrial factory with smokestacks, showing a financial downturn chart on the left and an upturn chart on the right, with 'INDUSTRIAL RECOVERY' text.

Key Facts

1Conflict in the Middle East is driving up energy prices and the US dollar.

2Europe is currently better equipped for an energy crisis compared to its situation in 2022.

Geopolitical tensions in the Middle East are exerting upward pressure on both energy prices and the US Dollar (USD). According to analysts at ING, while the conflict creates a supply-side shock, the impact on currency markets may be more contained than in previous years. Europe is currently viewed as being in a stronger position to handle energy disruptions compared to the crisis faced in 2022. Furthermore, the Federal Reserve is expected to refrain from aggressive monetary tightening in direct response to this specific geopolitical shock. This suggests that while the USD remains a safe-haven beneficiary, its potential for further significant gains might be limited. Meanwhile, emerging market currencies like the HUF, IDR, and PHP remain sensitive to shifts in global risk sentiment and rising energy costs.