Dollar gains as Middle East tensions and Fed stance weigh

April 30, 2026 / 1:33 PM

Sharjah24 - Reuters: The U.S. dollar climbed to a multi-week high as geopolitical tensions in the Middle East boosted oil prices and reinforced demand for safe-haven assets. At the same time, the Federal Reserve kept interest rates unchanged in a closely split 8–4 decision, its most divided outcome in decades. Policymakers showed a more hawkish stance, with several officials opposing any continued signal toward future rate cuts. Rising inflation concerns and firm economic conditions have led markets to reassess expectations, with traders largely ruling out rate cuts this year and increasing bets on potential tightening over the longer term.

Treasury yields rose sharply following the decision, reaching their highest levels since late March, reflecting stronger expectations of sustained higher rates.

Oil surge supports dollar strength

Oil prices jumped more than 4% amid reports that the United States is considering military options linked to the ongoing Iran conflict. The surge in energy prices has added to inflationary pressures globally while supporting the dollar, particularly as the U.S. economy is seen as less exposed to oil shocks compared to other regions.

Yen weakens, intervention concerns rise

The Japanese yen weakened beyond the 160 level against the dollar, nearing thresholds that previously prompted intervention by authorities. Despite signals from the Bank of Japan that rate hikes may be considered, investors remain bearish on the currency. Analysts suggest officials may delay intervention given economic sensitivities and ongoing geopolitical uncertainty.

Global central banks in focus

Attention now turns to upcoming policy meetings by the Bank of England and the European Central Bank, with markets anticipating possible shifts toward tighter monetary policy in response to persistent inflation.