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Posted April 24, 2026 at 10:15 am
Safe-haven demand from Middle East tensions kept the greenback supported, while Fed, ECB, BoJ, and BoE decisions may set the next big move.
The US dollar eased Friday but was still set for a weekly gain, as investors stuck with safe havens amid Middle East tensions and looming central bank meetings.
Markets can’t price the conflict with confidence because there’s no clear path to escalation or a fast diplomatic off-ramp, so foreign exchange moves have been choppy but contained. DRW Trading, a proprietary trading firm, said the next big swing may come only if the real economy gets hit – for example, if oil supply disruptions start lifting inflation in Europe or Asia. That matters for interest rates: central banks have mostly been in “wait and see” mode, but pricier energy could delay cuts. Futures markets already show investors expecting fewer Federal Reserve cuts, and a Reuters poll found a slim majority of economists looking for a European Central Bank rate hike in June as insurance against an energy-driven inflation shock.
For markets: Oil and central banks could unstick currencies.
When currency markets go quiet, they often need a clear trigger to break out. A supply-driven rise in oil prices would likely support the dollar while squeezing big importers like Europe and parts of Asia. This week’s rate decisions also matter because even small changes in central bank language can reset expectations for when cuts start. Japan adds a twist – officials keep warning they’ll step in if yen moves look speculative, which can make swings sharper than the data alone suggests.
The bigger picture: Energy shocks can reignite inflation.
After inflation cooled from its post-pandemic peak, many investors expected a steady drift toward lower rates. A war-driven energy spike flips that by pushing up prices, forcing central banks to stay restrictive for longer. That’s why the dollar often strengthens when geopolitics heats up: it’s a safe haven and a bet that US rates stay relatively high. If oil stays elevated, businesses and households could face another round of cost pressure just as budgets start to loosen.
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Originally Posted April 24, 2026 – The Dollar Held Firm As Traders Waited For Central Banks
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