Iran Trust Deficit Sends Oil to $104.95, Dollar Bid Hits FX

In currencies, the transmission was clean. The Japanese yen and Swiss franc found buyers ahead of the weekend, driven by the flight to safety. The euro and sterling fell against the dollar. EUR/USD drifted lower as the US yield premium expanded. The Australian dollar and New Zealand dollar, highly sensitive to risk appetite, slid alongside falling equity futures. Risk-sensitive EM currencies also faced pressure.

Oil-linked currencies such as the Canadian dollar and Norwegian krone were caught in a split signal. Normally, higher crude prices support these economies, yet the broad risk-off mood and the dollar’s strength overwhelmed that effect. The loonie struggled to rally despite crude’s surge. This dynamic repeats a pattern from previous geopolitical flare-ups: the dollar dominates when fear rises, even when the US is at the centre of the dispute.

What Comes Next

The next catalyst is not a data release but the possibility of a diplomatic signal over the weekend. If Washington or Tehran hints at a return to talks, oil could surrender some of the weekend premium and the dollar bid could fade. A lack of any positive headline would lock in the risk-off posture, keeping the dollar supported and commodity currencies under pressure. For forex traders, the position into the weekend is defensive: hold dollars or yen, lighten high-beta FX, and brace for a potential gap at the Sunday open.

For more on oil price dynamics and currency impact, see WTI Breaks Above $100 as Trump Says China Will Buy US Oil.