Trump Delays Iran Strike, But Dollars Oil-and-Yield Support Is Not Gone

The Dollar Is Coiling Rather Than Turning as Oil and Treasury Yields Both Run Into Resistance

What’s happening: The Dollar weakened modestly since late Thursday, then recovered against the Euro, Sterling and Canadian Dollar during the European morning, with ranges still tight. Oil and Treasury yields, the two markets that had been supplying fresh momentum, both ran into resistance: Brent failed to hold above $105–106 after President Trump said the US would not attack Iran before the November 3 midterm elections, and the US 10-year yield retreated after briefly reaching 5.354%.

Why it matters: Neither move is large enough to dismantle the Dollar’s support structure. Brent is still above $100, Middle East shipping disruption continues, the Fed is still discussing further tightening and Treasury yields remain elevated. Until oil or yields begin climbing again, the Dollar has little reason to escape consolidation, and a renewed break through both would revive its upside case.

The Dollar is coiling rather than turning. It weakened modestly since late Thursday, then recovered against the Euro, Sterling and Canadian Dollar during the European morning. Yet the ranges remain tight, largely because the two markets that had been supplying the Dollar with fresh momentum—oil and Treasury yields—both ran into resistance.

Brent failed to hold its push through $106 while the US 10-year yield retreated after briefly reaching 5.354%. Neither move is large enough to dismantle the Dollar’s support structure. But until oil or yields begin climbing again, the greenback has little reason to escape its current consolidation.

That leaves a simple map for the next move: Brent around $106 and the 10-year yield around 5.35%. A renewed break through both would revive the Dollar’s upside case. A sustained retreat in both would finally begin to challenge it.

Dollar Scenarios

Trump Takes the Immediate Iran Strike Off the Table

Oil provided the clearest example of how quickly the market can lose momentum without actually losing its risk premium. Brent reached $105.92 on Thursday. By Friday US session, however, Brent was back near $102.94.

Oil and Iran Data Points

• Brent: reached $105.92 on Thursday, then back near $102.94 by the Friday US session
• Trump: said the US would not attack Iran before the November 3 midterm elections and described negotiations as productive
• Pentagon: reportedly instructed CENTCOM a day earlier to complete preparations to resume major combat operations
• US Treasury: sanctioned more than a dozen tankers linked to Iran’s shadow fleet
• Iranian Foreign Minister Abbas Araghchi: Tehran is studying a US proposal and expects to respond within days

The reversal from the highs followed comments from US President Donald Trump, who said the US would not attack Iran before the November 3 midterm elections and described negotiations as productive.

That took some urgency out of a market that had been preparing for another escalation. Just a day earlier, reports said the Pentagon had instructed CENTCOM to complete preparations to resume major combat operations, while the US Treasury sanctioned more than a dozen tankers linked to Iran’s shadow fleet.

Iranian Foreign Minister Abbas Araghchi said Tehran was studying a US proposal and expected to respond within days. That means the military option has not disappeared. Its timetable has simply been pushed back.

For oil, that distinction is crucial. The market can remove some immediate strike premium without pricing a lasting settlement.

Supply Disruption Remains Serious, But Alternatives Are Working

The war continues to impair crude movement through the Strait of Hormuz, where nine tankers were reportedly attacked during the past week.

Hormuz vs Regional Flows

Kpler estimated about 9.5m barrels per day exited through Hormuz in the week through Tuesday, around 30% below pre-war volumes. But the broader regional flow picture has been more resilient. Including pipeline alternatives, total Middle Eastern crude flows were around 16.4m barrels per day, close to pre-war levels.

That resilience is one reason Brent has struggled to break decisively higher even as the security situation continues to deteriorate.

The risk premium remains “sticky” because shipping still requires escorts, insurance and higher operating costs while tanker attacks continue. But traders have also learned that reduced Hormuz traffic does not necessarily translate one-for-one into lost Middle Eastern exports.

So far, the system is damaged rather than broken.

Saudi Escalation Means Oil Is Not Only About Washington and Tehran

The Houthi-Saudi front is becoming harder for oil markets to ignore.

Saudi Front Data Points

• King Khalid airport, Riyadh: struck by two Houthi attacks on Thursday, one involving a Saudia aircraft, with three Saudis killed
• Flights: hundreds cancelled before authorities said normal operations resumed Friday
• Saudi-led coalition: promised a “firm response” and said it had destroyed three Houthi missile launchers
• Turkey and Pakistan: agreed to assist Saudi Arabia with deterrence measures
• France and Saudi Arabia: reportedly discussing French military support for the Yanbu oil terminal on the Red Sea

Two Houthi attacks struck King Khalid airport in Riyadh on Thursday. One involved a Saudia aircraft, and three Saudis were killed. Hundreds of flights were cancelled before authorities said normal operations resumed Friday.

The Saudi-led coalition promised a “firm response” and said it had destroyed three Houthi missile launchers. At the same time, Turkey and Pakistan have agreed to assist Saudi Arabia with deterrence measures, while France and Saudi Arabia are reportedly discussing French military support for the Yanbu oil terminal on the Red Sea.

That creates a second escalation channel for oil.

Even with Trump holding off on a US strike, a serious attack on Saudi export or production infrastructure could trigger a renewed repricing on its own. Yanbu is therefore relevant not because an attack is expected, but because the widening conflict means Saudi energy infrastructure has become part of the market’s potential risk map.

For now, civilian and transport-sector escalation has not been enough to extend Thursday’s crude rally. Energy infrastructure could be different.

10-Year Yield Fails to Hold Above 5.35%

The Dollar’s rates support encountered resistance at almost exactly the same time.

Treasury Yields and 30-Year Auction

• US 10-year Treasury yield: climbed to around 5.354% on Thursday before retreating to roughly 5.23%
• US 30-year Treasury yield: eased to around 5.607%
• 30-year auction size: $22bn
• 30-year auction high yield: 5.618%
• Indirect bidders: took 72.3%, above the roughly 68% average
• Direct bidders: took 20.9%
• Primary dealers: implied share of about 6.8%

The US 10-year Treasury yield climbed to around 5.354% on Thursday before retreating to roughly 5.23%. The 30-year yield eased to around 5.607%.

The initial rise followed comments from Federal Reserve Governor Christopher Waller in Istanbul, where he said additional rate hikes would still be needed, though they did not have to come at consecutive meetings. But yields turned lower after Trump’s Iran comments and the $22bn 30-year Treasury auction.

The sale cleared at a 5.618% high yield. Indirect bidders took a healthy 72.3%, above the roughly 68% average, while direct bidders took 20.9%. That left primary dealers with an implied share of about 6.8%.

It was not an extraordinary auction, but it was good enough to matter. End-investor demand prevented the latest long-end sell-off from feeding on itself and helped pull yields back from the day’s highs.

That removed another immediate source of Dollar momentum.

Dollar Has Lost Momentum, Not Its Macro Support

The Dollar therefore sits in an unusual but increasingly clear position.

The forces that supported its recent advance remain largely intact:

• Brent is still above $100.
• Middle East shipping disruption continues.
• The Fed is still discussing further tightening.
• Treasury yields remain elevated.

But none is accelerating.

Trump has delayed the immediate Iran strike risk. Crude failed to hold above $105–106. Treasury buyers stepped in as the 10-year tested 5.35%. That combination explains why the Dollar has been unable to break higher even without a convincing bearish reversal.

The underlying chain remains: oil pressure feeds inflation concerns, inflation pressure keeps Fed expectations tighter, tighter expectations sustain yields, and higher yields support the Dollar.

For another Dollar leg higher, that chain probably needs a fresh impulse.

Two Levels Could Decide the Next Dollar Break

Key Levels

• US 10-year yield: 5.35–5.42% zone
• Brent: roughly $106, with the September peak around 109.97

The first is 5.35–5.42% in the US 10-year yield. A sustained break through that zone would signal that the long-end sell-off is restarting despite Thursday’s auction demand.

The second is roughly $106 in Brent. A move above that area would put oil back through Thursday’s high and reopen the road toward the September peak around 109.97.

The strongest Dollar signal would be both occurring together.

Conversely, a credible Iranian acceptance of the US proposal—or a broader de-escalation that sends Brent lower—would remove an important inflationary impulse. If Treasury yields then fall with oil, the Dollar’s current consolidation could resolve sharply lower.

Next Catalysts: Iran, Saudi Arabia, Fed

The first test is expected within days, when Iran responds to the US proposal. A rejection could quickly restore the military-risk premium that Trump’s comments temporarily removed.

The Saudi-Houthi conflict is the second. Markets will be particularly sensitive to any sign that attacks are shifting toward oil infrastructure or Red Sea export facilities.

For rates, the 5.35–5.42% Treasury zone remains the level to watch.

Until then, the Dollar may remain trapped. But with both oil and yields still elevated, consolidation should not yet be mistaken for the end of its underlying support.

Related Coverage

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• Fed’s Musalem Says High Bond Yields Still Not Tight Enough to Replace Further Hikes: financial conditions remain accommodative despite the bond selloff, so high yields are not yet doing the Fed’s job.
• Bitcoin, Ether Correction Deepens as Macro Shock Exposes a Tired Rally: ETF redemptions and leverage turned fading momentum in crypto into a deeper correction.

Canada and Japan Data

• Canada Jobs Sink 68K, But Public-Sector Plunge Drives Much of the Damage: employment fell 68.3K against expectations for a gain, a second straight monthly decline, with public-sector losses driving much of it while wage growth accelerated.
• Japan Household Spending Falls -3.1% as Wage Gains Fail to Lift Consumption: improving wages, but consumers still cutting back as higher living costs squeeze household demand.

FAQ

Why hasn’t the Dollar broken higher or reversed?

Oil and Treasury yields, the two markets that had been supplying fresh momentum, both ran into resistance. Brent reached $105.92 on Thursday and was back near $102.94 by the Friday US session, while the 10-year yield retreated from around 5.354% to roughly 5.23%. Neither move is large enough to dismantle the Dollar’s support, since Brent is still above $100, Middle East shipping disruption continues, the Fed is still discussing further tightening and yields remain elevated. With none of those accelerating, the Dollar is consolidating rather than turning.

Does Trump’s delay mean the Iran oil risk premium is gone?

No. Trump said the US would not attack Iran before the November 3 midterm elections and described negotiations as productive, which removed some immediate strike premium. But Iranian Foreign Minister Abbas Araghchi said Tehran expects to respond to a US proposal within days, so the military option has not disappeared and its timetable has simply been pushed back. A rejection could quickly restore the premium, and the Houthi-Saudi front adds a second escalation channel that could reprice oil on its own.

Which levels could decide the Dollar’s next break?

The first is the 5.35–5.42% zone in the US 10-year yield, where a sustained break would signal the long-end sell-off is restarting despite Thursday’s auction demand. The second is roughly $106 in Brent, above which oil would be back through Thursday’s high and the road toward the September peak around 109.97 would reopen. The strongest Dollar signal would be both occurring together, while a credible Iranian acceptance or broader de-escalation that sends Brent and yields lower could resolve the consolidation sharply lower.

Key Takeaways

1. The Dollar is coiling rather than turning because oil and Treasury yields, its two sources of fresh momentum, both ran into resistance.
2. Brent reached $105.92 on Thursday and was back near $102.94 by the Friday US session after Trump said the US would not attack Iran before the November 3 midterms; the military option has been delayed, not removed.
3. Hormuz exits were about 9.5m barrels per day, around 30% below pre-war, but total Middle Eastern flows including pipelines were around 16.4m barrels per day, close to pre-war levels, so the system is damaged rather than broken.
4. The Houthi-Saudi front is a second escalation channel, and a serious attack on Saudi export or production infrastructure could trigger a renewed oil repricing on its own.
5. The 10-year yield climbed to around 5.354% before retreating to roughly 5.23% after Trump’s Iran comments and a 30-year auction that cleared at 5.618% with 72.3% indirect bids.
6. The chain from oil to inflation concerns, tighter Fed expectations, higher yields and a stronger Dollar remains intact but probably needs a fresh impulse for another Dollar leg higher.
7. The levels to watch are the 5.35–5.42% zone in the 10-year and roughly $106 in Brent, while a credible Iranian acceptance of the US proposal could resolve the consolidation sharply lower.

What to Watch Next

The first test is expected within days, when Iran responds to the US proposal: a rejection could quickly restore the military-risk premium, while credible acceptance could send Brent and yields lower together. The Saudi-Houthi conflict is the second, particularly any sign that attacks are shifting toward oil infrastructure or Red Sea export facilities.

For the Dollar itself, the 5.35–5.42% Treasury zone and Brent around $106 are the levels that decide whether consolidation resolves higher or lower.