FX.co ★ Dollar Edges Up on Friday but Set for Weekly Drop

The dollar index inched up to 99.3 on Friday, recovering slightly after a 0.8% drop in the previous session, as the war with Iran dragged on and the likelihood of a swift resolution remained low. Oil prices were volatile but hovered near their highest levels since 2022, intensifying worries about renewed inflationary pressures at a time when central banks are already taking a more cautious, hawkish stance. The Federal Reserve left the federal funds rate unchanged on Wednesday, and its updated projections still imply just one rate cut this year. However, policymakers stressed the uncertainty surrounding the conflict’s impact on the economy and underscored the elevated upside risks to inflation. The dollar strengthened across the board, with its most pronounced gains against the Japanese yen. Even with Friday’s rebound, the greenback is on track to end the week nearly 1% lower.