US Dollar Posts Strongest Weekly Gain in Four Months

US Dollar Surges

According to ХВИЛЯ: The US dollar is on track for its best weekly performance in four months, marking its strongest rally in recent months. This surge is driven by shifting expectations for US Federal Reserve interest rate cuts and escalating geopolitical tensions. The Bloomberg Dollar Spot Index has climbed 0.9% this week, its largest weekly gain since October.

Currency Market Shifts

The Japanese yen has weakened by 1.8% this week, reaching 155.50 per dollar. The euro also declined, falling 1% to 1.1750 dollars. These currency movements are fueled by a sharp increase in short-term options market positions, which have turned the most bullish on the US dollar since November. As of February 10, 2026, speculators held short positions against the dollar worth approximately $19.9 billion, with speculative traders increasing their bearish bets last week to the highest level since June.

Currency analysts point to markets pricing in a higher probability of a direct confrontation between the US and Iran. Richard Cochinos, a currency strategist at RBC Capital Markets, noted that

"pressure on oil prices prevents the euro and Japanese yen from being seen as safe havens, so the dollar is filling that void."

Chris Turner, head of currency strategy at ING Bank NV, added that

"the focus will now shift from the labor market back to inflation data,"

which could also influence the dollar's future trajectory.

The dollar's strength amid geopolitical strain and changing US monetary policy expectations signals a shift in investor sentiment. Following a period of market volatility and uncertainty, traders are adjusting to a new reality, which may lead to further currency fluctuations, especially if tensions with Iran continue to escalate. This shift in the world's primary reserve currency has significant implications for global trade and investment flows, affecting everything from commodity prices to corporate earnings.