The US dollar strengthened in global markets Friday as rising oil prices linked to the escalating conflict in the Middle East pushed investors toward safe-haven assets.

The US Dollar Index, which measures the currency against six major global currencies, climbed above the 100 level for the first time since late 2025.

Despite efforts by Washington and the International Energy Agency to ease market pressures, Brent crude oil has remained close to $100 per barrel as ongoing clashes following US and Israeli strikes on Iran threaten global energy supplies.

With stubbornly high oil prices and continued uncertainty, markets increasingly expect central banks to remain cautious about cutting interest rates as rising energy prices threaten to push up inflation.

Prevailing forecasts now suggest the US Federal Reserve will cut interest rates once this year, down from two previously expected.

As the US Dollar Index surged, the euro-US dollar exchange rate fell to its lowest level since August 2025 at 1.1433, while the US dollar-Swiss franc exchange rate tested its highest level since Jan. 23, 2026, at 0.7895, and the US dollar-Japanese yen reached its highest level since July 2024 at 149.68.

Analysts say the rise in energy prices and growing geopolitical uncertainty have pushed investors away from riskier assets and toward the US dollar, traditionally viewed as a safe haven during periods of global instability.

Dollar strength could persist

Erhan Aslanoglu, an economics professor at Istanbul Bilgi University, told Anadolu that investors typically prefer holding US dollars because the currency retains strong global purchasing power even during turbulent times.

He said Washington can increase dollar supply to meet global demand for safe-haven assets, unlike commodities such as gold.

Other factors supporting the US dollar include Japan’s move toward more expansionary economic policies under Liberal Democratic Party leader Sanae Takaichi, as well as relatively low interest rates in the eurozone, he added.

Kit Juckes, head of FX strategy at Societe Generale, said the US dollar is also benefiting from the country’s position as one of the world’s leading oil producers.

He added that the currency could remain strong into 2027 as long as the US economy avoids a sharp downturn and oil prices remain elevated.

However, the current strength of the dollar contradicts US President Donald Trump’s stated preference for a weaker currency and lower domestic interest rates to boost exports, Juckes said. (AA)

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