Dollar Adds Emphatically To War-led Gains

(RTTNews) - The U.S. Dollar surged further during the week ended March 13, amidst safe haven demand triggered by the Middle East war.

The likelihood of the massive surge in crude oil prices adding to price pressures, warranting hawkish monetary policy from the Federal Reserve also weighed heavily on sentiment, boosting the greenback.

The dollar's jump to a ten-month high is despite consumer price and PCE-based inflation readings from the U.S. that more or less aligned with forecasts.

The greenback recorded a solid two-week winning streak against the euro, the British pound, the Australian Dollar, the Japanese yen, the Swedish krona, the Canadian dollar as well as the Swiss franc. The Dollar Index which measures the Dollar's strength against a basket of 6 specified currencies rallied close to 1.5 percent during the past week. Here is a quick recap of the dollar's trajectory during the week ended March 13.

Data released by the U.S. Bureau of Labor Statistics on Wednesday showed annual headline inflation remaining steady at 2.4 percent as expected. The core component also matched forecasts at a steady level of 2.5 percent. Month-on-month inflation edged up to 0.3 percent and its core component edged down to 0.2 percent, in line with what the markets had anticipated.

Data released by the U.S. Bureau of Economic Analysis on Friday showed the economy expanded at an annualized 0.7 percent in the fourth quarter of 2025, well below 1.4 percent recorded in the advance estimate and 4.4 percent recorded in the third quarter.

Data from the U.S. Bureau of Labor Statistics on Friday revealed job openings rising to 6.946 million in January, rebounding from the over-five-year low of 6.550 million in December and surpassing market expectations of 6.7 million.

Data issued by the U.S. Bureau of Economic Analysis on Friday showed PCE price index rising 2.8 percent year-on-year in January, easing slightly from the near two-year high of 2.9 percent in the previous month and in line with market expectations. The core component edged up to 3.1 percent as expected.

The month-over-month PCE price index rose 0.3 percent in January as expected, versus 0.4 percent in December. The core PCE price index, which is the Federal Reserve's preferred gauge of underlying inflation, remained steady at 0.4 percent as expected.

Amidst benign inflation readings and a disappointing economic growth update, the six-currency Dollar Index gained 1.38 percent during the week ended March 13. The index closed at 100.36, versus 98.99 a week earlier. Though the Index had dropped to a low of 98.49 on Tuesday, it climbed to a high of 100.54 on Friday as war clouds deepened on the Middle East and ignited crude oil prices.

Amidst the dollar's demand as it remains the favored safe asset of choice, the EUR/USD pair ended the week on a heavily negative note, plunging 1.74 percent lower at 1.1416 versus 1.1618 a week earlier. During the week ended March 13, the pair ranged between the high of 1.1669 recorded on Tuesday and the low of 1.1411 touched on Friday.

The GBP/USD pair also slipped 1.39 percent during the week ended March 13 amidst data showing the U.K.'s GDP stalling month-on-month in January. Markets had anticipated a growth of 0.2 percent versus a 0.1 percent rise in December. The sterling declined to $1.3226 from $1.3413 a week earlier, after touching a high of $1.3485 on Tuesday and a low of $1.3217 on Friday.

The Australian Dollar also slipped against the resurgent U.S. Dollar during the week ended March 13. The pair ranged between the low of 0.6956 recorded on Monday and the high of 0.7192 recorded on Wednesday and eventually closed at 0.6981. The pair was at 0.7030 a week earlier, implying weekly losses of 0.70 percent.

During the week ended March 13, the Japanese yen plunged against the U.S. dollar. The USD/JPY pair rose 1.2 percent to 159.73 rising from 157.80 a week earlier. Trading during the week ranged between the low of 157.26 recorded on Tuesday and the high of 159.75 recorded on Friday.

The U.S. dollar is trading on a negative note at the onset of a busy central bank week. Interest rate decisions scheduled for the week include those by the Reserve Bank of Australia on Tuesday, the Federal Reserve on Wednesday and the Bank of Japan on Thursday. Interest rate decisions by Bank of England and European Central Bank are also due on Thursday.

With currency markets bracing for the first monetary policy meeting by major central banks after the start of the Middle East war, anxiety is writ large. The downside risks to economic growth and upside risks to inflation have complicated the decision making for central banks and aggravated the nervousness for markets.

The 6-currency index is currently at 99.97 versus 100.36 at close on Friday. The EUR/USD pair has jumped 0.63 percent to 1.1488 from 1.1416 on Friday. The GBP/USD pair has increased 0.51 percent to 1.3294 versus 1.3226 at the end of the previous week. Ahead of Reserve Bank of Australia's expected rate hike on Tuesday, the AUD/USD pair has jumped more than 1.2 percent with its rise to 0.7065 from 0.6981 on Friday. Amidst the yen's strength the USD/JPY pair has decreased 0.39 percent to 159.10. The pair had closed at 159.73 on Friday.