The U.S. dollar weakened against major currencies early Friday in European trading. This came as European stock markets gained, following U.S. President Donald Trump’s announcement that he will decide within two weeks whether to launch a direct military strike on Iran.
Trump cited a “substantial chance of negotiations” with Tehran, delaying a final decision to see if Iran abandons its nuclear program, according to the Wall Street Journal.
Reports indicate that the U.S. would only strike Iran if the powerful “bunker buster” bomb could guarantee the destruction of Iran’s underground Fordow nuclear site. Meanwhile, U.S. stock futures fell amid fears that the Israel-Iran conflict could trigger higher inflation and hurt U.S. economic growth.
Geopolitical tensions remain high. Israeli Prime Minister Benjamin Netanyahu ordered intensified strikes on strategic and government targets in Tehran after an Iranian missile hit a hospital in Beersheba. Another Iranian missile struck a leading Israeli research institute known for life sciences and physics.
Despite the dollar’s drop, it is on track for its largest weekly gain in over a month due to concerns over tariffs, inflation, and the Middle East. Early European trading saw the dollar fall to a two-day low of 1.1526 against the euro and a three-day low of 1.3496 against the British pound, down from previous closes of 1.1512 and 1.3476. If the dollar continues to fall, it may find support near 1.16 against the euro and 1.36 against the pound.
Against the Japanese yen and Swiss franc, the dollar slipped to 145.13 and 0.8159 respectively, from 145.23 and 0.8165. Support levels for the dollar are expected around 142.00 against the yen and 0.80 against the franc.
The dollar also edged lower against the Australian, New Zealand, and Canadian dollars, trading at 0.6495, 0.6007, and 1.3688 respectively. Support for the dollar may come near 0.66 against the Australian dollar, 0.61 against the New Zealand dollar, and 1.34 against the Canadian dollar.
Looking ahead, key economic data will be released during the New York session, including Canada’s new housing price index for May, U.S. retail sales for April, producer price index for May, Philadelphia Fed manufacturing index for June, and Eurozone consumer confidence for June.
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