The US dollar is heading toward its strongest weekly performance since October, supported by stronger-than-expected economic data, growing expectations that the Federal Reserve may maintain a tighter monetary stance, and rising geopolitical tensions between the United States and Iran.
The currency gained additional momentum after data showed a sharper-than-anticipated decline in new US unemployment benefit claims last week, reinforcing confidence in the resilience of the American labor market and strengthening expectations that interest rates could remain elevated for longer.
In early Asian trading on Friday, the dollar held firm near recent highs. Sterling hovered close to a one-month low at $1.3457 and is on course for a weekly loss of about 1.5 percent.
The euro slipped slightly to $1.1768, pressured by uncertainty surrounding the future leadership of the European Central Bank, Al-Rai daily reports.
The dollar index, which measures the US currency against a basket of major currencies, traded near a one-month peak reached on Thursday at around 97.89, putting it on track for a weekly gain exceeding one percent — its best performance in more than four months.
Safe-haven demand also supported the dollar amid escalating tensions between Washington and Tehran. US President Donald Trump warned Iran to reach an agreement regarding its nuclear program within 10 to 15 days or face serious consequences, while Iranian officials threatened retaliation against US military bases in the region if conflict erupts.
Investors are now awaiting key US economic indicators later today, including the core personal consumption expenditures (PCE) price index and fourth-quarter GDP figures, both closely watched for signals on the Federal Reserve’s next policy moves.
According to CME’s FedWatch tool, markets still expect two interest-rate cuts this year, although expectations for a June reduction have eased slightly.
Among other currencies, the Australian and New Zealand dollars edged lower, while Japan’s yen weakened modestly after data showed core inflation slowed to 2.0 percent in January — its lowest level in two years.
