USD Surges Broadly as Geopolitical Tensions and Cautious Mood Grip Markets

The US dollar rallied sharply heading into the weekend on March 13, 2026, buoyed by safe-haven demand amid escalating US-Iran tensions after President Trump vowed to "hit them very hard" in the coming week. The cautious market mood was compounded by disappointing UK GDP data, which printed flat at 0.0% month-over-month versus the 0.2% expected, weighing on GBP. European inflation data came in mixed, with Spain's final February CPI confirmed at 2.3% year-over-year while France's was revised lower to 0.9% from 1.0% preliminary. Despite rising rate hike expectations for other central banks, the dollar's strength persisted, driven by geopolitical risk premiums and shifting interest rate expectations favoring USD. FX option expiries at the 10am New York cut added to volatility across major pairs. Traders should monitor weekend developments on Iran and position cautiously, as gap risk remains elevated for Monday's open across EUR/USD, GBP/USD, and other dollar pairs.