The dollar index held steady on Friday and remained on track for its first weekly gain in three weeks, as stalled US-Iran peace efforts continued to support demand for the currency.
Persistent uncertainty around the Strait of Hormuz has kept risk sentiment fragile and maintained the dollar’s safe-haven appeal.
The situation escalated further after President Donald Trump signalled a more aggressive stance toward securing the strait, while both sides continue to uphold blockades that have effectively disrupted global energy flows. Treasury yields have remained firm amid inflation concerns.
On the macro front, recent data point to continued economic resilience. Jobless claims remain low by historical standards, indicating limited layoffs, while preliminary PMI figures showed a strong rebound in both manufacturing and services activity. This combination suggests that underlying demand remains firm despite geopolitical headwinds.
Looking ahead, the trajectory of the dollar and yields will remain closely tied to developments in the Middle East, with any escalation likely to reinforce the current safe-haven bid, while signs of de-escalation could trigger a retreat. Additionally, the Fed’s interest rate decision and press conference next week could also add volatility to both bond and forex markets.
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