Goldman Sachs Research discusses the USD outlook in light of the recent developments in the Middle East conflict.

"The Dollar continues to move in unison with headline sentiment, but we think the focus will soon move towards the economic aftermath, which in our view should be selectively supportive for the Dollar. Under our commodity strategists' baseline assumption that energy flows through the Strait of Hormuz will gradually normalize over the next month, our economists still expect a significant deterioration in current account balances across much of Asia," GS notes.

"In this way, we see important differences between this and prior policy evolutions; traffic through the Strait has been curtailed for more than a month, and that will have an impact on economic activity. As a result, we think the 2022 analogy will likely provide a better template for FX markets than 2025 in terms of how long the conflict can impact parts of the FX market," GS adds.