The U.S. dollar continued to hold near a two-month high on Thursday as renewed tensions in the Gulf weakened investors’ risk appetite. Amid rising geopolitical uncertainty, demand for safe-haven assets helped support the greenback.

The Dollar Index, which measures the strength of the U.S. dollar against a basket of major currencies, edged higher to around 99.45, staying close to its strongest level since early April. Analysts noted that the dollar’s safe-haven appeal is strengthening again as oil prices and global bond yields rise on geopolitical concerns.

In Asia, the Japanese yen remained in focus as it traded near 159.92 yen per dollar, close to the key 160 yen per dollar level. This is widely viewed as a sensitive zone that could prompt Japanese authorities to issue warnings or intervene to limit further yen weakness.

Pressure on the yen comes from the monetary policy gap between the United States and Japan. While sticky U.S. services inflation reinforces expectations that the Federal Reserve may keep interest rates high for longer, the Bank of Japan is also turning more hawkish as energy-driven inflation risks increase.

Other major currencies traded mixed. The euro edged higher to USD 1.1609, while the British pound was nearly flat around USD 1.3427. The Australian dollar held steady after Australia’s trade balance returned to surplus, while the New Zealand dollar recovered from a one-week low.

Risk assets also came under pressure, especially cryptocurrencies. Bitcoin fell to its lowest level in four months, trading around USD 63,984, while Ether briefly touched its weakest level since April 2025 before recovering slightly.

Overall, the U.S. dollar is being supported by three key factors: geopolitical tensions, elevated oil prices, and expectations that the Federal Reserve may keep interest rates higher for longer. In the short term, currency markets may remain volatile, particularly USD/JPY as the pair stays close to the sensitive 160 level.

Source: Reuters