[MARKET ANALYSIS] DXY is marginally firmer after early haven demand and cyclical pressure owing to the Iranian conflict

DXY: +0.2%

• Trades marginally higher as the downbeat risk tone provides some haven appeal and weighs on the greenback's cyclical counterparts, but with the gains in the dollar capped as its peers gradually clawed back some of the lost ground, while participants also await further geopolitical updates on the third day of military strikes in Iran and looming ISM Manufacturing data.

EUR/USD: -0.2%

• Gapped below the 1.1800 handle as the Iran conflict threatens global disruption, and with very little fresh from the bloc, while German Chancellor Merz voiced concerns regarding the fallout from the strikes ahead of his meeting with US President Trump in Washington on Tuesday, where he is to seek clarity on tariffs.

GBP/USD: -0.2%

• Fell at the open amid pressure in cyclicals and with Iran targeting a UK base in Cyprus, although the downside was cushioned with support seen at the 1.3400 level.

USD/JPY: +0.1%

• Price action is choppy with early haven demand seen to support the greenback and the yen, while there were some comments from BoJ Deputy Governor Himino, who said they are to raise rates if the economic outlook is met, and that the goal is to maintain price stability by avoiding excessive inflation and deflation.

Antipodeans: AUD/USD -0.1% / NZD/USD -0.1%

• Slumped at the open but then gradually recovered to return to near flat territory as some of the initial extreme moves moderated, and with gains in the commodities complex.

The DXY's modest gains reflect heightened haven demand amid escalating tensions in Iran, which is weighing on riskier assets and cyclical currencies. While the dollar finds some support, geopolitical uncertainty, particularly regarding military actions impacting global stability, suggests a cautious market environment ahead of additional data releases, including the ISM Manufacturing report.