The US dollar has seen a significant surge in global financial markets this week, as rising tensions in the Middle East have driven investors toward safer currencies. At the same time, expectations that the Federal Reserve will not quickly cut interest rates have further supported the strength of the American currency.
The dollar index, which tracks the dollar against six major world currencies, rose 1.2 percent to 98.85. Against the euro, the dollar strengthened by 1.6 percent, while the euro fell to $1.1618.
The US currency also gained ground against the Japanese yen, rising 1.1 percent to 157.80 yen.
These movements are largely due to the escalation of conflict in the Middle East, following attacks by the United States and Israel on Iran, which caused turbulence in financial markets and increased demand for the dollar—a currency traditionally viewed as a “haven” during times of uncertainty.
Geopolitical tensions have also caused dramatic increases in oil prices. On the US market, the price per barrel surged more than 35 percent, reaching $90.90—a weekly gain not seen since 1983. On the London oil market, the price rose approximately 28 percent, marking the largest weekly increase since 2020.
This sharp rise in energy costs has heightened fears of a new wave of inflation, which is already above the Federal Reserve’s target level of around 2 percent. Analysts suggest that the central bank may postpone interest rate cuts until at least June and possibly even later.
According to Lee Hardman, a currency analyst at MUFG, the key factor in the coming days will be oil price movements. If prices remain high or continue to rise, the dollar is likely to stay strong. However, if the Middle East crisis eases and oil prices decline, the US currency could weaken once again.
