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Dollar firms but struggles versus euro ahead of Iran and tariff risks

The Trump administration replaced its temporary tariff regime with new duties of 10% to 12.5% covering about 60 trading partners and roughly 99.4% of US trade, adding to weekend caution in FX positioning.

Reported · Written up by our desk · Major Pairs

Currency markets headed into the weekend in a cautious tone as traders held back on large directional bets amid risks tied to Iran and trade policy, according to Action Forex. The dollar ended the week broadly firmer, but it failed to deliver a clear breakout versus the euro despite further gains in US Treasury yields. Action Forex said the combination of higher yields and elevated oil prices was weighing on traditional low-yielding funding currencies, with the yen and Swiss franc among the weakest performers.

Investors also appeared to be waiting for geopolitical clarity, with Action Forex pointing to President Donald Trump’s comments to Axios about considering an operation against Iran that could be larger than before, along with the possibility of Israeli involvement. The outlet said markets face the prospect of material military developments occurring while exchanges are closed over the weekend, raising the risk of gaps on Monday.

Oil traders in particular were positioned for that risk, Action Forex noted, citing Brent moving above $100 per barrel before easing to around $97 after Thursday. The piece added that a weekend strike could shift Brent back toward the April high of $119.5, which would likely force another reassessment of the inflation outlook and complicate central bank rate expectations.

At the same time, Action Forex said trade policy remained a pressure point after the Trump administration replaced its temporary global tariff regime with new duties of 10% to 12.5% covering around 60 trading partners and about 99.4% of US trade, reinforcing a more protectionist stance even if the overall tariff structure was largely maintained.

Latest closeBrent $100.54 ▲6.9%

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