Heightened investor uncertainty stemming from the Iran conflict has pushed a key measure of implied volatility in the currency market to its highest point in eight months. Deutsche Bank's foreign exchange volatility index climbed on Friday to its highest level since July of last year, marking a second consecutive weekly increase. This development follows the Japanese yen's drop to its lowest level against the US dollar since July 2024 last week, while the euro also fell to its weakest point since August. The significant closure of the Strait of Hormuz has pressured oil-importing nations with rising crude prices, contributing to the increased volatility in currency markets. Furthermore, market turbulence has been amplified as traders scaled back their expectations for interest rate cuts from the Federal Reserve and other central banks, driven by accelerating inflation expectations. Moh Siong Sim, a foreign exchange strategist at OCBC Bank in Singapore, commented, "If energy prices remain elevated, the damage to economic growth in Europe and Asia could trigger even more turbulent conditions in the foreign exchange market." The impact of the Iran conflict extends beyond the currency market. Last week, volatility in US Treasuries, as measured by the ICE BofA MOVE Index, surged to a nine-month high, while the VIX stock volatility index also climbed to its highest level since April.