The U.S. dollar strengthened against major currencies—including the euro and Japanese yen—on Friday as investors sought refuge in safe-haven assets amid escalating tensions in the Middle East following Israel’s airstrikes on Iran.
Israel carried out a large-scale assault on Iran, targeting nuclear and missile facilities and reportedly killing several top military commanders. In response, Iran’s state media said it had launched hundreds of ballistic missiles in retaliation.
U.S. President Donald Trump, a key ally of Israel, urged Iran to return to the negotiating table over its nuclear program, suggesting Tehran provoked the strike by rejecting Washington’s ultimatum on uranium enrichment.
In afternoon trading, the greenback rose 0.3% against the yen to 143.88 and gained 0.1% against the Swiss franc to 0.8110, recovering from two days of losses against other traditional safe havens.
“These kinds of geopolitical shocks tend to provoke immediate market reactions, but history shows investors often look past them,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers in Boston. “The key question is how long this conflict continues. The longer it drags on, the greater the hit to market confidence.”
Despite Friday’s gains, the dollar remained on track for a weekly decline against both the yen and franc, with concerns over President Trump’s tariff strategy continuing to weigh on sentiment. The dollar is down nearly 1% versus the yen this week—its steepest weekly drop since mid-May—and is heading for a second straight weekly loss against the Swiss franc.
Juan Perez, trading director at Monex USA, noted that while the Israel-Iran conflict dominated headlines, tariffs and trade uncertainty are still the primary economic risks. “When actual military action breaks out, markets instinctively move into safe-haven assets like the U.S. dollar and gold. It’s a psychological response,” he explained.
The euro slipped 0.4% to $1.1539, snapping a four-day winning streak. Still, it was poised to notch a second consecutive weekly gain against the dollar.
The U.S. dollar index, which tracks the currency against a basket of major peers, rose 0.5% to 98.2, rebounding after two sessions of losses. Despite the uptick, the index is still set to log its second weekly decline in a row.
Gold prices also surged as investors flocked to safety, with spot gold rising 1.6% to $3,437.21 per ounce. Oil prices spiked to multi-month highs, with U.S. crude futures jumping more than 8% to $73.76 a barrel amid fears of supply disruption due to the conflict.
Meanwhile, investors mostly brushed off stronger-than-expected U.S. consumer sentiment data. The University of Michigan reported its Consumer Sentiment Index rose to 60.5 in June, the first improvement in six months and above the Reuters forecast.
“There’s a lot weighing on the market’s faith in the U.S. dollar this year,” said Monex’s Perez. “But when it comes to armed conflict, markets still instinctively turn to the dollar and gold as the safest places to be.”
