The U.S. dollar held steady at the start of the final trading day of the week in the North American session. The three major currency pairs — EURUSD, USDJPY, and GBPUSD — were all within 0.06% of their previous closing levels, with initial moves lower generally attracting USD buyers. From a technical perspective, the bias, risks, and targets for each pair provide a framework for understanding near-term directional drivers. The dollar's resilience comes against a backdrop of rising Treasury yields this week, which typically bolster the currency by enhancing returns on dollar-denominated assets.

U.S. stock futures were mixed, implying the Dow up 141 points, the S&P 500 unchanged, and the Nasdaq down 46 points. Intel shares rose approximately 2.8% to $103 after the company beat expectations and raised its forward guidance, though the stock traded well off its post-announcement highs above $110.

New Tariff Framework Announced

Late yesterday, the Trump administration announced a new tariff framework replacing the temporary 10% universal tariff with a two-tier system covering roughly 60 countries and approximately 99% of U.S. imports. The new duties take effect at 12:01 a.m. ET on Friday.

• 10% tariff: Countries with laws banning forced labor imports.
• 12.5% tariff: Countries without comparable forced labor laws.

The tariffs are being imposed under Section 301 of the Trade Act of 1974, a legal authority viewed as more durable following the Supreme Court's earlier ruling against the previous tariff framework. Section 301 has been the primary U.S. instrument for unilateral trade enforcement, previously deployed extensively during the 2018–2019 U.S.–China trade dispute, making it a well-tested legal pathway for imposing duties without congressional approval.

Exemptions include steel, aluminum, autos and auto parts already under separate tariffs, along with certain food, agriculture, fertilizer, energy products, and qualifying USMCA goods.

The administration stated the policy is designed to combat forced labor, encourage stronger labor standards abroad, and maintain import protections while incentivizing countries to qualify for the lower 10% rate. The tariffs could add modest inflation pressure and raise costs for import-dependent companies, while likely fueling additional trade negotiations and potential legal challenges. The two-tier structure effectively creates a diplomatic lever, giving trading partners a concrete policy change — adopting forced labor bans — to qualify for reduced rates.

Middle East Tensions Escalate

Middle East tensions escalated further overnight as the U.S. campaign against Iran entered its 13th consecutive night of strikes, with attacks reportedly focused on Iranian military infrastructure tied to missile, drone, and maritime operations. Iran has continued retaliatory actions through missile and drone attacks while also backing Houthi operations that have increasingly threatened commercial shipping in the Red Sea.

President Trump issued one of his strongest warnings yet, stating that Iran will be financially responsible for damage to ships, cargo, and related property. In a Truth Social post, he said any future maritime losses would be covered using Iranian assets frozen and controlled by the United States, declaring that "any and all damages" would be paid with Iranian money. The statement appears aimed at deterring further attacks on commercial shipping while increasing economic pressure on Tehran.

The maritime security situation remains a key concern for markets. Iranian-backed Houthi forces attacked two Saudi oil tankers in the Red Sea, prompting fresh disruptions to shipping routes, higher insurance costs, and renewed concerns over global energy supplies. The Red Sea attacks are part of a pattern that has led major shipping companies to reroute vessels around Africa's Cape of Good Hope, adding roughly 10–14 days to transit times between Asia and Europe. Although U.S. officials say key waterways remain open, traders continue to price in the risk of broader regional escalation.

Crude Oil and U.S. Yields

Crude oil was down $2.25 at $89.95 after reaching a high of $93.50 yesterday. Today's intraday high stood at $92.83, with a low of $88.74. The 100-day moving average, currently at $89.91, sits near current trading levels and remains a key barometer for buyers and sellers. Crude is up $7.90 for the trading week, with the weekly gain reflecting a geopolitical risk premium tied to the escalation in Middle East tensions.

U.S. yields were lower to start the trading day but sharply higher for the week:

• 2-year yield: down 2.9 basis points at 4.330%, but up 15 basis points on the week.
• 10-year yield: down 1.9 basis points at 4.683%, but up 13.4 basis points for the week.
• 30-year yield: down 0.9 basis points at 5.16%, but up 9.0 basis points for the week.

The weekly rise in yields — particularly the 10-year near 4.7% — reflects market pricing around Federal Reserve policy expectations alongside increased supply considerations, and has been a key driver supporting the dollar's firm tone across major pairs.

Source: ForexLive