Dollar Surges to Three-Month High Amid Iran War Crisis and Energy Shock

The U.S. dollar climbed to its strongest level in over three months on Friday, marking its second consecutive weekly gain since the outbreak of war with Iran. As global markets buckled under geopolitical pressure, the greenback emerged as the dominant safe-haven asset, benefiting from both investor flight to safety and America's status as a net energy exporter.

The dollar index, tracking the currency against a basket of major peers, rose 0.13% to 99.79, heading for a weekly gain of roughly 0.8%. The euro dropped to $1.1504, its lowest since late November, while the Japanese yen weakened to 159.455 per dollar — a 20-month low. Japan's Finance Minister Satsuki Katayama responded swiftly, warning that Tokyo stands ready to intervene in foreign exchange markets if yen volatility continues threatening household finances.

The currency turbulence follows U.S. and Israeli airstrikes on Iran nearly two weeks ago that killed the country's supreme leader. Retaliatory strikes from Tehran have since escalated the conflict, severely disrupting Persian Gulf shipping. New Supreme Leader Mojtaba Khamenei has vowed to keep the Strait of Hormuz closed, sending oil prices sharply higher.

To ease energy market stress, the International Energy Agency approved a record release of 400 million barrels from strategic reserves, while Washington issued a 30-day waiver allowing countries to purchase sanctioned Russian petroleum products currently stranded at sea.

Markets analysts warn of a dangerous combination of rising inflation and slowing economic growth. Traders now expect the European Central Bank to raise rates as early as June, while the U.S. Federal Reserve may delay rate cuts until September. Central bank decisions next week in the U.S., Europe, and Japan are expected to provide clearer guidance. Meanwhile, Bitcoin rose 1.65% to $71,349, and Ether gained 2.54% to $2,115 as crypto markets tracked broader risk sentiment.