New York, February 28, 2026, 07:41 EST — Market closed.
- USD swings sharply as markets digest U.S.-Israeli strikes on Iran, followed by Iranian missiles fired across the Gulf.
- The dollar index wrapped up Friday around 97.6. Oil prices and shifts in U.S. rate-cut expectations look likely to steer the action as the new week gets underway.
- OPEC+ is set to meet Sunday. Next up: Monday’s U.S. ISM numbers, then the February jobs report lands March 6.
The U.S. dollar faces a volatile reopening, with U.S. and Israeli strikes on Iran, followed by Tehran’s missile retaliation, escalating Middle East tensions right as FX markets closed for the weekend.
Why care at this moment? The dollar keeps its crown as the world’s top “safety” trade when things get shaky. This time, though, the shock cuts right through oil and inflation, which has the potential to jolt U.S. rate bets fast.
Heading into the weekend flare-up, the dollar index, tracking the greenback against six key currencies, slipped 0.12% to 97.61 on Friday. Even so, it was on pace for its first monthly advance since October. “There’s a real deep unease in markets about inflation and growth so far in 2026,” Adam Button, chief currency analyst at investingLive, noted. Fiona Cincotta, strategist at City Index, described the dollar as stuck in “a little bit of a holding pattern,” waiting for the next spark. Reuters
Risk appetite was showing cracks. Wall Street slipped Friday: the S&P 500 lost 0.43%. U.S. Treasury yields edged down, oil jumped on supply concerns—Brent finished 2.45% higher at $72.48 a barrel, while the 10-year yield dropped to 3.96%. “Now it’s time for a breather,” said Talley Leger, chief market strategist at The Wealth Consulting Group, pointing to semiconductors after their sharp run. Reuters
Oil acts as a direct pipeline from geopolitical flare-ups into dollar moves, bumping up inflation expectations and making central banks wary. Brent might push toward $80 a barrel if a major supply shock hits, Barclays noted. Still, the bank pointed out that the current $3-$5 a barrel “risk premium” could evaporate fast as long as exports aren’t interrupted. Reuters
But there’s a possible offset coming: OPEC+ could go for a bigger output hike than initially planned, according to two sources familiar with the discussions. Eight members are expected to gather Sunday at 1100 GMT. Saudi Arabia and the UAE, for their part, have already ramped up exports ahead of any potential supply shakeup.
Israel confirmed a “pre-emptive” strike on Iran Saturday, touching off explosions in Tehran. The country responded by shutting schools and workplaces, bracing for possible retaliation. The New York Times quoted a U.S. official saying American strikes were already in progress, while a Reuters source said Iran’s Supreme Leader Ayatollah Ali Khamenei had been relocated to safety. Reuters
Iran fired missiles targeting Gulf Arab countries where U.S. troops are stationed, according to officials from those states. UAE state media reported a fatality in Abu Dhabi—one person killed. Bahrain acknowledged a strike within its borders, saying a U.S. Fifth Fleet service center was hit.
FX traders get their first real read on prices as the market reopens Sunday night in New York, rolling into Monday for Asia. Early signals? Crude, U.S. yields, and the trio of classic havens: the dollar, the yen and the Swiss franc.
This dynamic goes both directions for the greenback. If investors pile into safe assets across the board, the dollar tends to benefit. But when falling yields push money into Treasuries specifically, the yen and franc can outshine as safe havens, often leaving the dollar’s performance more uneven.
Rates remain part of the conversation. On Friday, the market was betting on roughly 62 basis points of Fed cuts before year-end (with one basis point equal to 0.01 percentage point). Still, hotter U.S. producer prices—a key wholesale inflation signal—highlighted the caution from policymakers around any move to ease.
Still, betting on a stronger dollar isn’t without hazards. If tensions cool quickly, or if oil flows look steady, that weekend safety premium could fade in a hurry. A steeper drop in yields on growth worries? That’s usually a win for the yen and franc over the greenback.
Coming up: OPEC+ gathers on Sunday. Monday brings the ISM manufacturing numbers. Then, the U.S. February jobs data lands on Friday, March 6—just days before the Fed meets March 17-18.
