The U.S. dollar was on track for a second consecutive weekly decline on Friday, as fresh tariff threats targeting countries that trade with Cuba added to growing global tensions and reduced appetite for U.S. assets.
The White House said that President Donald Trump signed an executive order authorizing tariffs on countries that supply oil to Cuba. The move added to an already tense geopolitical backdrop involving Iran, Venezuela, Greenland, and Europe.
Meanwhile, reports suggesting Trump is weighing possible military strikes against Iran pushed oil prices sharply higher and put additional pressure on the dollar index (DXY).
On the domestic front, the dollar found limited relief after U.S. lawmakers reached a Senate deal aimed at avoiding a partial government shutdown. In Asia, data showed that inflation in Tokyo slowed, although it remained in line with the central bank’s target.
“The DXY continued its downward trajectory as Trump’s threats of military action against Iran added further pressure,” said Mantas Vanagas, a senior economist at Westpac Group, in a research note.
The dollar index, which tracks the greenback against a basket of major currencies, edged up 0.2% to 96.35, narrowing its weekly loss to around 1.1%.
In currency markets, the euro slipped 0.2% to $1.194, while the Japanese yen weakened 0.17% to 153.39 per dollar. Sterling also eased, falling 0.1% to $1.3791.
Earlier in the week, the dollar touched a four-year low after Trump appeared to downplay the currency’s weakness. The greenback later recovered modestly after Treasury Secretary Scott Bessent reiterated Washington’s commitment to a strong-dollar policy.
Sources said Trump is considering a range of options against Iran, including targeted strikes on security forces and leadership figures to encourage protests. The president has described U.S. naval forces in the region as an “armada” moving toward Iran.
Last week, the dollar posted its steepest weekly fall since April, partly fueled by investor unease over U.S. policy related to Greenland.
Additional support came after the Federal Reserve kept interest rates unchanged on Wednesday. Fed Chair Jerome Powell cited a resilient economy and reduced risks to both inflation and employment.
The weaker dollar has offered some relief to the yen, which has traded mostly between 152 and 154 per dollar this week amid speculation about potential rate checks by U.S. and Japanese authorities—often viewed as a precursor to currency intervention.
Data released Friday showed Tokyo’s core consumer prices rose 2% year-on-year in January, slowing from the previous month but matching the central bank’s inflation target.
Elsewhere, the Australian dollar slipped 0.2% to $0.7033, while the New Zealand dollar fell 0.2% to $0.6066.
In digital assets, Bitcoin eased 0.1% to $84,309.27, while Ether declined 0.3% to $2,808.19.
