The core event across all sources is the strengthening of the US Dollar (USD) against major currencies, particularly the Japanese Yen (JPY), amid escalating geopolitical tensions in the Middle East and robust US economic data. The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, traded near 99.00 to 99.15 during the European session on Thursday, with gains attributed to both safe-haven demand and positive US macroeconomic releases [1][3][4].
The USD/JPY pair rose to approximately 157.35, reversing earlier Yen gains as the US Dollar resumed its upward trajectory. The US Dollar was up 0.08% against the Yen on the day, and 0.85% for the week, according to percentage change tables provided [1][2]. The US Dollar also showed strength against other currencies, being the strongest against the Australian Dollar and the Swiss Franc in daily and weekly comparisons, respectively [1][2][3].
Market sentiment was driven by a combination of factors. The ADP Employment report showed the US private sector added 63K jobs in February, surpassing the 50K estimate and the prior reading of 11K [1][2][3]. The ISM Services PMI for February came in at 56.1, above expectations of 53.5 and up from 53.8 in January [1][2][3][4]. These data releases led traders to scale back expectations for a July Federal Reserve rate cut, with the CME FedWatch tool indicating the probability of a cut increased to 50.2% from 37.9% earlier in the week [1].
Geopolitical developments further fueled demand for safe-haven assets. Reports included a US submarine sinking an Iranian warship, NATO intercepting an Iranian missile, and Israel launching new strikes across Iran and Hezbollah infrastructure in Beirut [2][4]. Tehran denied reports of willingness to negotiate, instead preparing for a prolonged conflict [3][4]. The US Senate rejected a resolution to require President Trump to seek congressional approval for further military action against Iran [2]. Crude oil prices rose for the fourth consecutive day, with West Texas Intermediate trading at $77.15, up 1.4% on the day [2][3].
While the US Dollar outperformed the Yen, the JPY and CAD both showed relative strength against other peers due to their own safe-haven and commodity-linked appeal, respectively [1][3]. The USD/CAD pair traded flat around 1.3645, with higher oil prices supporting the Canadian Dollar [3].
Forward-looking statements from the sources indicate that markets widely expect the Federal Reserve to keep rates unchanged until the summer, despite calls from President Trump for lower rates [4]. Fears of a prolonged Middle East conflict are expected to continue supporting the US Dollar in the near term [4].
CONCLUSION
The US Dollar strengthened significantly against major currencies, particularly the Japanese Yen, driven by robust US economic data and escalating Middle East tensions. Market participants have reduced expectations for imminent Federal Reserve rate cuts, and safe-haven demand remains elevated. The overall market impact is high, with the USD likely to retain its strength amid ongoing geopolitical uncertainty.