Tensions in the Middle East remain elevated, with disruptions in the Strait of Hormuz now lasting for 14 consecutive weeks. According to conventional international political economy, rising geopolitical risks should push oil prices higher, weaken the US dollar, and drive safe-haven demand for gold.

Reality, however, has delivered the exact opposite: the US dollar continues to strengthen, oil prices remain tightly controlled, and gold has suffered a sustained decline.

The First Contradiction: The US Dollar Should Have Weakened, Yet It Became Stronger. Before the Middle East crisis began, the US Dollar Index was trading around 97 at the end of February. Over the following months, even during the most intense period of geopolitical tensions, the Dollar Index peaked at only around 100.6.

However, as the so-called Memorandum of Understanding (MOU) between the United States and Iran began to emerge, international oil prices fell sharply. Rather than declining alongside oil prices, the US Dollar Index continued to strengthen, breaking above the 101 level for the first time since May 2025.

The Second Contradiction: Oil Should Have Risen, Yet It Fell. At the end of February, Brent crude traded around US$70–72 per barrel. At the height of the Middle East conflict, prices briefly surged to US$119. Yet once the MOU surfaced, international crude prices began a steady downward trend.

Importantly, the Strait of Hormuz has not been fully reopened, yet oil has already fallen below US$80 per barrel. An equally striking pattern has emerged: every rebound in oil prices has been short-lived, with prices consistently returning to lower levels.

The Third Contradiction: Gold Should Have Rallied, Yet It Collapsed. Before the Middle East conflict intensified, gold traded at approximately US$5,200 per ounce.Today, it has fallen to around US$4,200.

Although the underlying issues between the United States and Iran remain unresolved, gold has not strengthened—instead, it has come under persistent and systematic selling pressure.

The simultaneous rise of the US dollar, the sharp decline in gold, and unusually subdued oil prices appear to point toward an unavoidable conclusion: The markets appear to be under an unusually high degree of control.

The Middle East conflict resembles a carefully orchestrated financial campaign, with every development serving a single objective: reinforcing the global dominance of the US dollar.Who is orchestrating this strategy, and through what mechanisms has such precise market intervention been achieved?

Top-Level Strategy: Bessent + Warsh

Scott Bessent brings extensive experience from financial markets, and his assessment of the dollar is remarkably direct: "If rate cuts come before a stronger US dollar, the dollar could face irreversible damage."That single statement reveals the sequence underlying the broader strategy.Rate cuts are not impossible—but they cannot come yet

With confidence in the US dollar already under pressure and global de-dollarization efforts accelerating, cutting rates prematurely would effectively signal that the United States has abandoned its commitment to protecting the dollar's value.

The consequences could be severe.

Therefore, strengthening the US dollar and restoring global confidence in it has become the immediate priority. Only after confidence has been rebuilt can interest rate cuts become politically and financially safe. Kevin Warsh's appointment perfectly serves this strategy. His first appearance delivered four key signals, all aimed at restoring confidence in the US dollar. 

First, A Clear Break from the Powell Era. The defining characteristic of Jerome Powell's leadership was responding to market expectations—supporting markets when they weakened and tightening when markets became overheated.

Warsh eliminated virtually all forward guidance, signaling that the Federal Reserve would no longer act as the market's "babysitter."

Second, Tightening Under the Banner of Reform. The creation of five dedicated working groups covering communications, the balance sheet, data selection, and the inflation framework effectively lays the institutional groundwork for a prolonged balance-sheet reduction. 

Third, A Strong Commitment to Monetary Discipline. The updated dot plot showed that nine Federal Reserve officials expect additional rate hikes during 2026. Market-implied probabilities for further tightening have approached 90%. Those tightening expectations themselves strengthen the US dollar.

Fourth, Reviving Greenspan's "Constructive Ambiguity". By refusing to publish his own interest-rate projections or provide a clear policy roadmap, Warsh has effectively told markets to "go interpret the data yourselves."

The result is greater uncertainty, increased volatility, and stronger demand for US dollar assets as global investors seek safety.

Trump, who previously pressured Powell to step down for refusing to cut rates, has remained notably silent regarding Warsh's hawkish stance. That silence speaks volumes. It reflects acceptane of the broader strategy: first hawkish, then dovish; first strengthen the dollar, then loosen policy.

Regardless of any future criticism Trump may direct toward the Federal Reserve, his broader objective appears to be preserving the appearance of central bank independence.

Execution: Trump

Warsh's responsibility lies on the monetary side—shrinking the balance sheet, tightening dollar liquidity, and supporting the currency. But monetary policy alone cannot simultaneously suppress inflation expectations, weaken gold, and expand US energy exports.

That task falls to Trump. His principal tool is the Middle East conflict. Given today's challenging domestic and international environment, conflict has become one of the few remaining tools available for defending the US dollar.

Viewed from this perspective, the Middle East crisis is not merely a regional conflict—it is an energy war and a financial war disguised as a military confrontation.

The Middle East remains the heart of global oil supply. Disruptions in the Strait of Hormuz should normally send oil prices sharply higher. Trump's strategy, however, appears deliberately counterintuitive.

Step One: Create Crisis, Gain Pricing Power. Escalating tensions increase America's influence as one of the world's largest energy exporters, strengthening its pricing power.

Step Two: Control Oil Prices, Control Inflation. Excessively high oil prices would push inflation higher, forcing the Federal Reserve either to delay future rate cuts or even tighten further.

That would conflict directly with Warsh's roadmap of tightening first and easing later.Looking back over the entire conflict, Trump has repeatedly attempted to influence markets through public statements.

Whenever oil prices surged, signals suggesting that an MOU was close were quickly released, helping drive oil back from US$119 to below US$80. This kept inflation expectations contained while preserving room for future monetary easing.

Step Three: Pressure Gold. When the Strait of Hormuz is disrupted and oil prices rise, gold becomes both the dollar's primary competitor and one of the world's most liquid assets Forcing global markets to sell gold, acquire dollars, and purchase oil represents what many view as the most coherent financial transmission mechanism.

The division of responsibilities has become increasingly clear:

Trump influences oil through public messaging. Warsh strengthens the dollar through monetary discipline. Bessent provides the overarching strategic framework.

Yet balance-sheet reduction, future rate cuts, managing oil prices through the Middle East conflict, and suppressing gold are fundamentally defensive measures.Their objective is to plug the leaks in confidence surrounding the US dollar.The broader strategy also contains an offensive component: leveraging renewed confidence in the dollar to launch a new cycle of global capital accumulation.

Supporting Role: Wall Street

Upgrading Traditional Financial Instruments: The CME has launched 24-hour crude oil and gold futures trading.This effectively brings global energy and precious-metals pricing fully into the US financial system, allowing American capital to respond immediately to market developments regardless of time zone.

Tokenizing Financial Assets: Wall Street is advancing plans to tokenize approximately US$114 trillion worth of assets.As the world's largest pool of financial assets migrates onto blockchain infrastructure largely led by the United States, the first-mover advantage of a digitized US dollar becomes even stronger.

The IPO Wave of Technology Giants: The public listings of companies such as SpaceX, Anthropic, and OpenAI will absorb enormous amounts of global capital, all ultimately settling in US dollars.

The Return of the Plaza Accord Discussion: At the recent G7 Summit, policymakers once again raised the topic of the Plaza Accord.The original 1985 Plaza Accord forced the Japanese yen to appreciate roughly 50% within three years and represented America's use of political tools to solve dollar valuation problems.

Its renewed discussion suggests that the United States may no longer be satisfied with relying solely on market mechanisms and could increasingly employ coordinated political and financial strategies to reshape the global currency landscape.

The Overall Strategic Blueprint：

Viewed through this lens, the Middle East conflict is not simply a geopolitical confrontation. It is an energy war and a financial war conducted under the appearance of military conflict. The fighting around the Strait of Hormuz, Trump's public interventions, and Warsh's monetary policies all serve a common objective: defending the dominance of the US dollar.

Balance-sheet reduction makes the dollar more valuable. Future rate cuts preserve longer-term growth expectations. The Middle East conflict suppresses gold while helping control inflation. Financial tools then monetize the renewed credibility of the US dollar.

For ordinary investors, this means one thing: Volatility is likely to become the new normal.The distinction between geopolitical risk and financial risk is rapidly disappearing. Respect the market—but, more importantly, respect the trend. Approaching these changes with a long-term perspective, remaining cautious, and respecting market dynamics may prove to be the only reliable survival strategy in an increasingly turbulent era.

About TMGM

Founded in Sydney, Australia in 2013, TMGM Group is the Regional Official Partner of Chelsea Football Club.

As a global provider of financial trading services, TMGM is regulated by the Australian Securities and Investments Commission (ASIC), the Vanuatu Financial Services Commission (VFSC), the Financial Services Commission Mauritius (FSC Mauritius), and the Seychelles Financial Services Authority (FSA), providing clients with multiple layers of regulatory protection.