Dollar Set for Biggest Weekly Gain in Over a Year

Emirates 24/7 — The U.S. dollar held steady in early Asian trading on Friday, heading for its largest weekly gain in more than a year as the escalating conflict in the Middle East boosted demand for safe-haven assets.

The euro and yen remained under pressure following a surge in oil prices triggered by the conflict. The spike has stoked inflation risks for energy-importing economies and shifted expectations regarding the policy paths of the U.S. Federal Reserve and other central banks.

Earlier hopes for de-escalation have been replaced by a fresh wave of uncertainty. Iran warned that Washington would "deeply regret" the sinking of an Iranian warship, further heightening tensions.

U.S. President Donald Trump stated his desire to participate in selecting Iran’s next leader, following U.S. and Israeli airstrikes that killed the late Supreme Leader Ali Khamenei in the opening hours of the war.

"If the Middle East conflict continues at its current pace, it is likely to lead to sustainably higher inflation, a stronger dollar, and a significant reduction in the chances of U.S. interest rate cuts," Tony Sycamore, market analyst at IG, said in a note.

The dollar index, which measures the greenback against a basket of currencies, fell 0.06% to 99.00 but remained on track for a weekly gain of approximately 1.4%—its largest rise since November 2024.

The conflict intensified on Thursday as U.S. and Israeli aircraft struck targets in Iran, while several Gulf cities faced renewed attacks. In cryptocurrencies, Bitcoin fell 0.26% to $70,956.52, while Ether declined 0.27% to $2,074.84.