The Bloomberg Dollar Spot Index strengthened on Friday, positioning the U.S. dollar for its best monthly performance of 2024. Concurrently, the Japanese yen weakened, breaching the closely watched level of 160 yen per U.S. dollar, which heightened the risk of intervention by Japanese authorities.

The index rose 0.2 percent on Friday, closing at its highest level since November. The dollar is on track for its strongest monthly gain since December 2024, as conflict in the Middle East has disrupted Wall Street's trading strategies for the world's primary reserve currency.

Ongoing missile exchanges between Iran and Israel, alongside Tehran's strikes on several Gulf nations, have persisted despite efforts by U.S. President Donald Trump to broker peace talks. Both nations have indicated a willingness to continue hostilities, and President Trump has again postponed a deadline for Iran to reach an agreement with the United States.

Data released on Friday by the U.S. Commodity Futures Trading Commission showed that bullish bets on the U.S. dollar continued to increase through March 24.

The USD/JPY pair climbed as much as 0.4 percent to 160.41, its highest level this year. "A break above 160 for dollar-yen is certainly attention-grabbing. The level itself isn't magical, but we will be watching to see if verbal intervention escalates," said Alex Cohen, a foreign exchange strategist at Bank of America. "That said, given the current broad-based dollar strength, Japanese authorities may be more hesitant to deploy foreign reserves for intervention compared to a scenario driven solely by yen weakness."

The yen's depreciation has increased the likelihood of market intervention by Japan. The country's Finance Minister stated earlier on Friday that "bold action" might be taken to address excessive currency movements.

The EUR/USD pair fell 0.2 percent to 1.1510. The AUD/USD pair declined 0.3 percent to 0.6866, contributing to a weekly loss of 2.1 percent for the Australian dollar. The USD/CAD pair rose 0.2 percent to 1.3886, reaching its highest point since January 19. The pair gained 1.2 percent for the week, marking its third consecutive weekly increase.

According to a Bloomberg survey of analysts, Canada's Consumer Price Index is now forecast to rise 2.4 percent this year, up from a previous projection of 2.2 percent. The average unemployment rate for 2026 is expected to be 6.7 percent, compared to a prior estimate of 6.5 percent. Economic growth is projected at 1.1 percent, slightly lower than the previous forecast of 1.2 percent.