The U.S. dollar continued to rise on Friday, supported by a sharp increase in Treasury yields as markets faced two major risks: oil prices climbing above $100 per barrel and renewed global trade tensions.

The U.S. Dollar Index held near 101.45, its highest level in three weeks. Meanwhile, the British pound weakened to $1.3313, the euro slipped to $1.1376, and the Japanese yen remained close to a 40-year low at 163.86 per dollar.

Oil Prices and Tariffs Add to Inflationary Pressure

Oil prices rose above $100 per barrel for the first time since May after Yemen’s Houthis attacked two Saudi oil tankers in the Red Sea, extending the Middle East conflict to another critical shipping route.

At the same time, the U.S. administration announced plans to impose new tariffs of 10% and 12.5% on goods from 60 trading partners. The combination of higher energy costs and import tariffs is increasing the risk of renewed inflation.

U.S. Treasury Yields Surge

Inflation concerns pushed the benchmark 10-year U.S. Treasury yield above 4.7%, its highest level in more than 18 months.

The 30-year yield remained well above 5%, while the 2-year yield stood near 4.3555%. Higher yields are making the dollar more attractive and placing additional pressure on other major currencies.

Fed Uncertainty Could Increase Market Volatility

Investors are now turning their attention to the Federal Reserve’s upcoming policy meeting.

Even without an immediate rate increase, the Fed’s decision to provide less forward guidance could still tighten financial conditions. By retaining more flexibility and offering fewer clear signals, the central bank may create greater volatility around future policy decisions.

Conclusion

The U.S. dollar is being supported by higher Treasury yields, safe-haven demand and expectations that the Fed may maintain a more restrictive policy stance.

However, the current rally also reflects a riskier global environment, as higher oil prices, tariffs and geopolitical tensions simultaneously increase inflationary pressure and threaten global economic growth.

Source: Reuters