Dollar Rises as Middle East War Worries Weigh on Euro

Investors flock to safe-haven assets amid concerns over energy costs and economic impact

Mar. 13, 2026 at 3:23pm

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The U.S. dollar rose against major currencies on Friday, on track for a second straight weekly gain, as the war in the Middle East drove investors toward safe-haven assets and weighed on energy-sensitive currencies like the euro. The dollar index, which measures the greenback's strength, was up 0.4% at 100.10, with the euro down 0.4% against the dollar at $1.1466. Analysts say the war is causing global investors to unwind cross-border exposures and push money into safe havens, while punishing currencies of net energy importers like the euro area.

Why it matters

The sharp and prolonged rise in oil prices resulting from the Middle East conflict would severely hurt the economies of energy-dependent countries like Japan and the euro area, while the United States would be relatively insulated as a net crude exporter. This is driving investors to seek the safety of the U.S. dollar, putting pressure on currencies like the euro.

The details

President Donald Trump said the U.S. would be "hitting Iran very hard over the next week", shortly after issuing a partial 30-day waiver for purchases of sanctioned Russian oil, in an effort to ease prices fueled by the U.S.-Israeli war on Iran. Data showed U.S. consumer spending increased slightly more than expected in January, along with continued strength in underlying inflation, bolstering views that the Federal Reserve would not resume cutting interest rates for some time.

  • On Friday, the dollar index was up 0.4% at 100.10, its second consecutive weekly gain.
  • In the two weeks since the Iran conflict set off a surge in oil prices, traders had pushed bets on a first Fed rate cut to as late as December. On Friday, they were betting the Fed will probably next cut interest rates in September.

The players

Donald Trump

The President of the United States who said the U.S. would be "hitting Iran very hard over the next week".

Karl Schamotta

The chief market strategist at Corpay in Toronto who said "Global investors are unwinding cross-border exposures, pushing money into safe havens, and punishing currencies issued by net energy importers."

Sonu Varghese

The global macro strategist at Carson Group who said "An already large headache for the Federal Reserve is going to turn into an even larger one, and it's likely the Fed will not cut rates in 2026 and may even start talking about rate hikes later this year."

Jane Foley

The head of FX strategy at Rabobank who said "We have therefore reduced our EUR/USD forecasts on a 1- and 3-month view to 1.14 and 1.15 respectively from 1.16."

Satsuki Katayama

The Finance Minister of Japan who said the country is ready to take the necessary steps against yen moves that impact people's lives.

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What they’re saying

“Global investors are unwinding cross-border exposures, pushing money into safe havens, and punishing currencies issued by net energy importers.”

— Karl Schamotta, chief market strategist at Corpay

“An already large headache for the Federal Reserve is going to turn into an even larger one, and it's likely the Fed will not cut rates in 2026 and may even start talking about rate hikes later this year.”

— Sonu Varghese, global macro strategist at Carson Group

“We have therefore reduced our EUR/USD forecasts on a 1- and 3-month view to 1.14 and 1.15 respectively from 1.16.”

— Jane Foley, head of FX strategy at Rabobank

What’s next

Policymakers are likely to take a dim view of the effect that exchange rate weakness will have on already-soaring import bills, and pressure to intervene to prop up the battered yen could increase in coming days and weeks.

The takeaway

The Middle East conflict is driving a flight to safety in global financial markets, with the U.S. dollar emerging as a prime beneficiary as investors seek refuge from the economic fallout of surging energy costs, particularly for energy-dependent economies in Europe and Asia.