The euro and yen remained on the back foot as the crisis drove oil prices ever higher, spurring inflation risks in economies dependent on energy imports and upending expectations for policy by the Federal Reserve and other central banks.

Earlier hopes of a de-escalation gave way to fresh uncertainty, with Iran warning that Washington would “bitterly regret” the sinking of an Iranian warship. U.S. President Donald Trump said he wanted to ‌be involved in choosing ⁠Iran’s next ⁠head of state after U.S. and Israeli air strikes killed Supreme Leader Ali Khamenei in the early moments of the war.

“If the Middle Eastern conflict continues at its current intensity, it’s likely to bring sustained higher inflation, a stronger U.S. dollar, and a vastly reduced chance of Fed rate cuts,” IG market analyst Tony Sycamore wrote in a note.

The dollar index, which measures the greenback against a basket of currencies, was trading a touch lower by 0.06% at 99.00, still on course for a 1.4% gain this week that would be the most since November 2024.

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The euro was little changed at $1.1612, while the yen tacked on 0.06% to 157.5 per dollar. Sterling was almost steady, up just 0.04% at $1.3361.
The war escalated on Thursday, with ⁠U.S. and ‌Israeli jets hitting areas across Iran and Gulf cities coming under renewed bombardment. In a phone interview with Reuters, Trump said Mojtaba Khamenei, a son of the late supreme leader who has been considered a favorite to succeed his father, was an unlikely ⁠choice.

The greenback was one of a handful of winners in a volatile few sessions that have dragged stocks, bonds and, at times, even safe-haven precious metals lower.

The spike in energy prices from the Middle East war has stoked fears of a resurgence in inflation, with overnight index swaps (OIS) showing shifts in rate outlooks for major central banks.

Traders have pushed back the time frame for the next easing by the Fed to either September or October, according to LSEG estimates. Rate-easing expectations from the Bank of England have also been pared back, while money markets increased bets on European Central Bank rate hikes as early as this year.

“The fears of what happened to inflation when the Russia-Ukraine war began and what we saw post-pandemic with supply shocks, that’s still sort of front ‌of mind,” Skye Masters, head of markets research at National Australia Bank, said on a podcast. “You see that repricing in OIS curves, and you are seeing some meaningful repricing in bond markets as well.”

With the war in focus, currency investors shrugged off Thursday’s economic data.

The number of Americans filing new applications ⁠for unemployment benefits was unchanged last week, while layoffs dropped sharply in February, consistent with stable labor market conditions.

The market is now focused on Friday’s employment report. Nonfarm payrolls likely increased by 59,000 jobs last month after accelerating by 130,000 in January, a Reuters survey of economists predicted. The unemployment rate is expected to have held steady at 4.3%.

TD Securities head of FX strategy Jayati Bharadwaj said she sees room for short‑term adjustment in long dollar positioning given the current risk‑off tone. But she expects the Iran conflict to remain contained, especially in a U.S. midterm election year.

“(The) U.S. dollar upside should persist only while risk premia remain elevated in crude oil, potentially echoing the price action seen in June 2025 until a regime shift happens in Iran with U.S. backing,” Bharadwaj said in a note.

The Australian dollar strengthened 0.16% versus the greenback to $0.7017. The kiwi rose 0.15% to $0.5903.

In cryptocurrencies, bitcoin fell 0.26% to $70,956.52, and ether declined 0.27% to $2,074.84.

The search for Nancy Guthrie, the 84-year-old mother of NBC “Today” show co-host Savannah Guthrie, entered its 33rd day on March 5, 2026, with authorities reporting progress in the investigation into her apparent abduction from her Tucson-area home on Feb. 1.

Pima County Sheriff Chris Nanos told NBC News in an interview that investigators “are definitely closer” than ever to identifying a suspect or suspects. The sheriff emphasized ongoing forensic work, including DNA analysis from multiple evidence items, and review of hundreds of hours of surveillance footage. While no arrests have been made, Nanos described the case as active and advancing, with a dedicated task force including four detectives, a sergeant and FBI personnel assigned full-time.

The case has gripped national attention since Nancy Guthrie vanished after a family dinner on Jan. 31. She was reported missing the next day. Authorities believe she was taken against her will, citing drops of blood found on her front porch and doorbell camera footage showing a masked individual near the property. No ransom demands have been confirmed, and investigators have ruled out certain theories while pursuing all leads.

Recent developments include clarification on physical evidence. On March 4, the Pima County Sheriff’s Department confirmed that DNA from a pair of black gloves found about two miles from the home traced back to a local restaurant employee unrelated to the case. Sheriff Nanos explained the gloves matched ones worn by the figure in surveillance video but belonged to someone working across the street from where they were recovered. “The owner of the glove, we found working at a restaurant across the street,” Nanos said, stressing the item “has nothing to do with the case.” Other gloves recovered during the investigation were sent to a Florida lab for further DNA testing, with results pending due to challenges in separating mixed samples.

The family has offered a $1 million reward for information leading to Nancy Guthrie’s safe return, a figure announced in late February. Savannah Guthrie, her sister Annie and brother-in-law Tommaso Cioni visited the home earlier this week in their first public appearance there since the disappearance began. They placed yellow flowers at a growing memorial site featuring ribbons, crosses, prayers, a “Let Nancy Come Home” sign and an angel statue. The emotional scene underscored the family’s ongoing anguish and hope.

Savannah Guthrie visited the “Today” show studios on March 5 to thank colleagues for their support during her extended absence from the air. An NBC spokesperson said she remains focused on family and the search effort but plans to return on air when ready. “Everyone loves you. And whenever you’re ready, we are here,” the network affirmed.

Public interest has spurred volunteer proposals. The United Cajun Navy submitted a detailed 41-page operational plan for expanded searches using thermal drones, 25 specialized canines and coordinated desert grid sweeps. NewsNation reported the plan awaits approval from the Pima County Sheriff’s Office, which has not yet responded after nearly a week. The proposal reflects community desire to assist amid the month-long effort.

Media coverage has highlighted the case’s broader implications, with opinion pieces noting intense attention on high-profile disappearances and calls for equitable focus on all missing persons cases. The Pima County Sheriff’s Office continues urging the public to report any relevant information, emphasizing verified tips’ value.

As the investigation progresses into its second month, authorities maintain hope for a resolution. The sheriff’s confidence in closing in on leads offers a measure of optimism for the Guthrie family and supporters nationwide. Nancy Guthrie remains missing, and the search for answers continues in the Catalina Foothills community.

The ordeal has prompted widespread prayers and vigils, with yellow ribbons appearing across Tucson and beyond. Family statements stress gratitude for law enforcement and public support while pleading for any information that could bring Nancy home.

Stocks fell in Japan and Australia, pulling the broader MSCI Asia Pacific Index down 0.5%. The gauge has declined about 7% since the war began. Treasuries dropped and the dollar gained during the US session, with the currency set for its best week since 2024. US equity gauges also dropped Thursday, although they were off the session lows.

Attention was mostly on oil, with West Texas Intermediate crude dropping as much as 2.5% to almost $79 a barrel on Friday. That came after the Trump administration was weighing a range of options for addressing the spike in oil and gasoline prices amid the war in Iran, Interior Secretary Doug Burgum said. Still, oil is headed for the biggest weekly surge since 2022.

The ongoing US-Israeli offensive against Iran has jolted global energy markets, pushing US crude to multi-year highs amid concerns that disruptions through the Strait of Hormuz may constrain supplies. The conflict is already unsettling flows to key buyers, with top importer China moving to conserve fuel, heightening inflation risks and market volatility if the fighting persists.

“What matters now is whether the war will last days, weeks, or longer,” said Marco Oviedo, senior strategist at XP Investimentos. The possibility that the conflict doesn’t last long “remains the base case, and that the US is winning the battle. But Iran’s refusal to back down is keeping things tense.”

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Iran launched a fresh wave of missile and drone strikes across the Gulf on Thursday evening, with attacks reported in the United Arab Emirates, Bahrain, Qatar and Kuwait. Iranian Foreign Minister Abbas Araghchi told NBC News that his country hadn’t asked for a ceasefire and had no intention of negotiating.
However, the US remains defiant. Trump told Axios he should be involved in selecting a successor, the outlet reported, citing an interview with the president.

West Texas Intermediate was down 2.09 percent at $79.32 per barrel at around 0015 GMT, having soared 8.5 percent on Thursday to $81.01. Brent North Sea Crude, which rose 4.9 percent on Thursday, was not yet being traded.

“Further action to reduce pressure on oil is imminent and the oil (price) seems to have pretty much stabilised,” US President Donald Trump said on Thursday.

On Tuesday, Trump had ordered the US Development Finance Corporation to provide political risk insurance for all maritime trade through the Gulf.

He said the US Navy would “if necessary” begin escorting tankers through the Strait of Hormuz — a vital chokepoint for crude which Iran has effectively closed off — “as soon as possible.”

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On stock markets, Japan’s Nikkei index was down 0.8 percent shortly after the open, while South Korea’s benchmark Kospi slipped 1.2 percent.
On Thursday, European exchanges shed around 1.5 percent and Wall Street’s main indices also retreated.