• Natural Gas prices show sensitivity towards the situation in the Middle East.
• Markets were caught by surprise as Israel said it will retaliate against Iran.
• The US Dollar Index pops back above 106.00 and is running into a winning streak. 

Natural Gas (XNG/USD) prices are getting some support on Tuesday after Israel issued a harsh statement saying that it has no choice but to retaliate again against Iran, ignoring several diplomatic calls and G7 leaders urging Israel to keep its head cool. The sigh of relief seen on Monday after Iran said it does not want to seek any further escalation of tensions led to a 4% decline in Gas prices, but this proved to be short-lived. 

With risks of an escalating war still on the cards, the DXY US Dollar Index is thriving as the main safe haven for investors to park their funds. As if that is not enough, the overall market narrative about US interest rates is changing, with investors pricing in that rates will either stay steady for longer or even rise further even as Federal Reserve (Fed) officials are still seeing a reason to cut this year. The gap between market expectations and the Fed is substantially big, and could mean more US Dollar strength to come should Fed Chairman Jerome Powell this evening admit that cuts will be postponed. 

Natural Gas is trading at $1.91 per MMBtu at the time of writing.