Dollar holds firm as investors assess new US Tariffs and Middle East risks

Financial markets remained cautious heading into the weekend as investors assessed the impact of a new wave of tariffs imposed by the United States.

Market participants are also keeping a close watch on developments coming out of the Middle East.

Oil pulls back after strong gains

Oil prices moved lower early Friday after posting strong gains in the previous session.

West Texas Intermediate crude traded slightly below $90 per barrel after rising by about 6% on Thursday.

The move in oil markets came as investors continued to assess broader market risks.

The decline early Friday represented a correction following the sharp rise seen during the previous trading session.

Meanwhile, the US Dollar Index moved sideways near 101.40.

The index had climbed above 101.50 late Thursday, reaching its highest level in three weeks before easing back.

The dollar's performance remained a key focus for currency markets.

Traders continued to assess the impact of fresh US tariff measures alongside broader economic and geopolitical developments.

US announces new tariffs

The United States announced late Thursday that it had imposed new tariffs on more than 50 trading partners.

The announcement came shortly before a temporary levy on global imports was due to expire.

According to a US official, the latest tariffs are not simply a replication of tariffs that were struck down by the Supreme Court in February.

The official said the measures are instead aimed at addressing forced labor in the production of goods.

The announcement has added another layer of uncertainty for financial markets.

Investors are now assessing the potential implications of the new trade measures while also monitoring developments in other major economic regions.

ECB holds rates steady

The European Central Bank left its key interest rates unchanged following its July policy meeting.

During the post-meeting press conference, ECB President Christine Lagarde did not indicate whether policymakers were likely to consider a rate hike in September.

Lagarde noted that the ECB still had important economic data to assess before its next meeting.

The euro weakened against the US dollar following the ECB decision.

EUR/USD fell about 0.3% on Thursday and entered a consolidation phase below 1.1400 on Friday.

The pair was trading around 1.1377 after the euro weakened against the dollar.

The decline came despite the ECB keeping rates unchanged and Lagarde acknowledging that there had been some calls for a rate hike.

Yen faces fresh intervention warning from Japan

USD/JPY rose nearly 0.5% on Thursday and reached a fresh four-decade high.

The currency pair was relatively calm during the early European session on Friday and traded near 163.80.

Investors continued to monitor official statements as USD/JPY remained at elevated levels.

Pound recovers slightly

GBP/USD recovered modestly on Friday but remained below 1.3350 during the European morning.

The move followed a sharp decline in the previous session.

The pound's recovery remained limited as investors continued to assess broader currency market developments and the impact of the latest US tariff announcements.

Investors are now looking ahead to the preliminary July PMI figures from the Eurozone, the UK and the US for fresh indications about economic activity and the potential direction of financial markets.