The dollar is regaining its strength—but only because it has no other choice?

The US-Iran conflict triggered a surge in oil prices, leading to a strengthening of the US dollar. However, this rally is not a return to risk aversion, but rather a "passive beneficiary" of the reshaping of the global energy landscape: when soaring oil prices severely impact the currencies of energy-importing countries, the US, as a net exporter, becomes the only alternative destination for capital. This logic is clearly reflected in market performance: the divergence between the two traditional safe-haven assets, the US dollar and the Japanese yen. The US, leveraging its status as a net energy exporter, has strengthened against the trend, while Japan, with approximately one-third of its energy imports passing through the Strait of Hormuz, is directly under pressure on its trade balance. The yen fell more than 1% against the dollar on Monday, hitting a new monthly low. The safe-haven logic has given way to the energy landscape—the strength of the US dollar is essentially a passive result of an unbalanced global order. However, the short-term weakening of the yen does not signify a fundamental shake-up of its safe-haven status. Goldman Sachs, in its latest report, recommends increasing holdings of gold, the US dollar, and the Japanese yen as a core portfolio for mitigating geopolitical risks. Its allocation logic is based on two points: first, the US dollar and the Japanese yen, as traditional safe-haven currencies, have a historical success rate of 67% during geopolitical conflicts and are expected to continue strengthening in an environment of rising oil prices and pressure on risk assets; second, gold possesses both ultimate safe-haven attributes and resilient returns, with a 12-month expected return of 5.9% and a negative correlation with US real yields, highlighting its allocation value during periods of uncertainty. In terms of specific operations, Goldman Sachs emphasizes the need for coordinated allocation of these three assets to achieve risk diversification: In the foreign exchange market, trading opportunities can be sought in the US dollar, Japanese yen, and currencies of oil-exporting countries; gold should be included as a core asset in the portfolio, complementing low-volatility stocks and infrastructure assets. At the same time, it is necessary to be wary of the opportunity cost of excessive concentration in a single safe-haven asset. If geopolitical conflicts ease or oil prices fall, positions should be balanced promptly to maintain flexibility while mitigating shocks. The strengthening of the US dollar is driven by energy rather than safe-haven demand. Since Trump's return to the White House last year, the traditional safe-haven attribute of the US dollar during market turmoil has significantly weakened. Economic policy uncertainty and geopolitical instability have made overseas investors increasingly cautious about US dollar assets. Last weekend, the US-Israeli coalition launched a large-scale bombing campaign against Iranian targets, triggering a chain of regional conflicts. Following the news, the US dollar index jumped sharply, seemingly indicating a resurgence of safe-haven sentiment. However, Reuters columnist Mike Dolan points out that the core logic behind this dollar rally is not an influx of funds into the dollar for safe haven, but rather stems from the structural differences in the energy exposure of major economies—buying dollars is more about selling the currencies of energy-importing economies. Market performance confirms this assessment. On Monday, international oil prices surged by as much as 10%, directly impacting currencies reliant on energy imports: Japan, with about one-third of its energy imports passing through the Strait of Hormuz, saw the yen fall by more than 1%; the euro also fell by 1%, hitting a more than one-month low. From a macro perspective, the actual impact of this oil price shock remains relatively mild. Barclays economists estimate that every $10/barrel increase in international oil prices will drag down global economic growth by a maximum of 0.2 percentage points. Brent crude rose a net $5 to $77/barrel on Monday, and the direct impact on the real economy remains manageable, with a particularly limited negative impact on US demand. Inflation, however, provides additional support for the US dollar. The US core inflation rate is currently above 3%, and rising oil prices further strengthen the Federal Reserve's policy rationale for maintaining high interest rates this year, thereby consolidating the dollar's interest rate advantage. However, this transmission mechanism contains potential risks. Barclays' rule of thumb shows that for every $10/barrel increase in oil prices, the dollar appreciates by approximately 0.5% to 1.0%. This means that if dollar-denominated energy prices continue to rise, driving up the dollar exchange rate, it will simultaneously exacerbate the energy shocks suffered by overseas economies and further depress their currencies, forming a self-reinforcing cycle of "rising oil prices → stronger dollar → deteriorating overseas economies → further strengthening dollar." As Mike Dolan stated, this situation is not in the interest of any party, including Washington itself. One of the core economic agendas of the Trump administration is precisely to correct the dollar's long-standing overvaluation. Goldman Sachs' defensive portfolio: Short-term bullish on the dollar, holding gold, and expecting the yen to recover. In its latest report, Goldman Sachs recommends increasing holdings of the dollar, yen, and gold as a core portfolio to cope with geopolitical risks. The logic is that the dollar is strengthening in the short term due to its status as a net energy exporter; the yen, although under pressure due to its import dependence, has room for recovery after the conflict subsides; and gold has been the most stable performer in past geopolitical shocks, highlighting its defensive value. Goldman Sachs believes the US dollar will remain strong in the short term amid rising geopolitical risks, listing it as a key consideration in cross-asset allocation. However, forecasts suggest this strength may not last until the end of the year: the 3-month target for the euro against the dollar is 1.18, roughly unchanged from the current level; the 12-month target has been revised upwards to 1.25. In contrast, the yen's situation is more complex under energy shocks. Goldman Sachs' 3-month forecast for the dollar against the yen is 160, down from the current level of 156.1, implying further yen weakness, reflecting the short-term pressure from its reliance on energy imports—about one-third of Japan's energy imports pass through the Strait of Hormuz, and soaring oil prices directly impact its trade balance. In the six geopolitical events analyzed in the research report, the yen's average return was -1%, with a hit rate of only 33%, underperforming other safe-haven assets. However, as the impact of the conflict subsides, the yen may gradually recover, with the 12-month target falling back to 155. This is precisely the core logic behind Goldman Sachs' inclusion of it in its overweight portfolio: short-term pressure does not change its long-term allocation value, but investors need to carefully distinguish its differentiated performance from other safe-haven currencies under energy shocks. Among the three major safe-haven assets, gold's defensive value is considered the most certain. Goldman Sachs explicitly lists it as a core defensive tool under geopolitical risks, giving it an overweight rating. The report shows that spot gold is currently around $5254 per ounce, with a 12-month target price of $5565, corresponding to an upside of approximately 5.9%. This judgment is based on gold's stable performance in past geopolitical shocks: in six major events statistically analyzed in the research report, gold's average return was positive 3%, with a hit rate as high as 67%, making it the most stable among all safe-haven assets. At a time when the risk of stock market pullbacks is rising, increasing gold holdings helps to effectively smooth portfolio volatility.