The US Dollar Index (DXY) eased to around 99.70 during Friday’s Asian session. Rising geopolitical tensions in the Middle East may increase demand for safe-haven assets, which could lend support to the dollar. Meanwhile, the US Personal Consumption Expenditures (PCE) inflation report for January will be the key focus later on Friday.
The US Dollar Index (DXY), which measures the US Dollar (USD) against a basket of six major currencies, is trading near 99.70 during Friday’s Asian session. Although the index is slightly lower on the day, it remains on track for a second straight weekly gain and is hovering around its highest level since November 2025, supported by rising geopolitical tensions in the Middle East.
Officials from the Pentagon and the National Security Council (NSC) acknowledged that they had underestimated Iran’s willingness to shut the Strait of Hormuz following recent US military strikes while planning the current operation. Meanwhile, Iran’s new supreme leader, Mojtaba Khamenei, stated that the strategic waterway should remain closed and warned that Tehran would continue attacks on its Persian Gulf neighbors. The ongoing conflict involving the US, Israel, and Iran could continue to support the US Dollar as investors seek safe-haven assets.
At the same time, expectations for interest rate cuts by the Federal Reserve have eased, as surging oil prices raise concerns that inflation could remain elevated and complicate the central bank’s policy outlook.
Market participants will look to the January US Personal Consumption Expenditures (PCE) Price Index, due later on Friday, for further direction. The headline PCE is expected to rise 2.9% year-on-year, while core PCE—the Fed’s preferred inflation gauge—is forecast to increase 3.1% over the same period. A softer-than-expected inflation reading could put downward pressure on the US Dollar in the near term.
Sources: Lallalit Srijandorn
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