The U.S. dollar rose against other major currencies during thin trading late Sunday, as investors pivoted toward the American currency as a relatively safe haven, following the failure of prolonged talks between Washington and Tehran to reach a peace agreement, plunging markets into a seventh week of uncertainty.

U.S. President Donald Trump said on Sunday that the U.S. Navy would begin imposing a blockade on the Strait of Hormuz, a vital corridor for about 20% of the world's daily energy supplies, which Iran has effectively closed to traffic since the outbreak of war in late February. This has led to a jump in oil prices of more than 30%, increasing concerns about a broad wave of inflation.

The dollar, which is viewed as a safe haven due to the low exposure of the United States to imported energy price inflation, rose as Asian markets opened, pushing the euro down by 0.53% to $1.1663, while the dollar climbed 0.1% against the Japanese yen to reach 159.43.

The United States and Iran had announced a two-week truce on April 7, which investors initially welcomed by selling oil and redirecting some investments toward riskier assets like stocks. However, anxiety over the fragility of this agreement prompted a reversal of those investment positions later.

Fiona Cincotta, senior market analyst at City Index, said that what is happening now is a "complete dismantling of any optimism that preceded the peace talks, and a return to the scenario of the dollar as a safe haven, with oil rising and an exit from other assets."

She added that markets sometimes tend to overreact, especially in light of this significant amount of uncertainty, noting that pricing these developments still represents a major challenge for investors.

In contrast, currencies most sensitive to risk, such as the Australian dollar and the British pound, came under strong pressure, falling by 1.1% and 0.5% respectively.

As expectations of a return to rising inflation escalate, investors have priced in the probability of several central banks, such as the European Central Bank and the Bank of England, resorting to raising interest rates this year, in a sharp shift compared to previous expectations before the outbreak of the war, which indicated stable or even lower interest rates.

As for global stocks, which ended last week near their highest levels since early March supported by optimism regarding the possibility of reaching a settlement, they remain about 2% lower compared to their levels before the outbreak of the war.

At the same time, gold has lost about 10% of its value since late February, as investors prefer the dollar as the primary safe haven at the moment.