The US dollar moved higher on Friday, nearing its strongest levels in months as investors rushed toward safer assets amid rising tensions in the Middle East.
It’s been a volatile week for markets. Uncertainty increased after Donald Trump decided to extend the deadline for potential action targeting Iranian energy facilities until April. That added to fears about how the situation might unfold.
As a result, investors are leaning toward the dollar as a safe haven. At the same time, expectations are growing that the US could raise interest rates again before the end of the year, especially with inflation risks rising due to higher energy prices.
Other major currencies didn’t perform as well. The Japanese yen hovered near 159.61 per dollar, while the euro slipped slightly to $1.1525 and the British pound edged down to $1.3325.
According to Carol Kong from Commonwealth Bank of Australia, ongoing conflict tends to support the dollar. She noted that if oil prices keep rising, it could put more pressure on currencies from energy-importing regions like Japan and Europe.
In Asia, the Australian dollar dropped to a two-month low, and the New Zealand dollar also weakened.
Looking at the bigger picture, the dollar index climbed to 99.93 and is on track for a monthly gain of about 2.3%—its strongest performance since mid-last year.
Data from CME Group shows markets are now pricing in a 46% chance of a US rate hike in December. That’s a notable shift, as expectations had previously leaned toward rate cuts before the recent crisis.
Meanwhile, both the Bank of England and the European Central Bank are also expected to move toward tighter monetary policy in the coming months.
In simple terms, global uncertainty is pushing investors toward the dollar—and that’s giving it a strong boost for now.
