Dollar Index Hits 14-week High

The dollar index remained below 99 on Tuesday after a sharp intraday drop in the previous session, as hopes for a swift end to the Iran war reduced safe-haven demand for the currency. President Donald Trump said the US military operation in Iran is nearing its conclusion and running well ahead of the initial four- to five-week estimated timeframe. He also indicated plans to waive oil-related sanctions and have the US Navy escort tankers through the Strait of Hormuz to help keep oil prices in check. The dollar had previously rallied on safe-haven buying as the Middle East conflict and surging oil prices raised fears of prolonged economic disruption and resurgent inflation. Looking ahead, investors await the February CPI report on Wednesday and January’s PCE price index on Friday for further clues on inflation trends, though neither is expected to fully reflect the impact of the Iran war.

The dollar index returned to gains on Monday, trading near 99.2 after a short-lived decline on Friday, as the conflict with Iran showed no signs of easing and energy prices continued to rise, with oil climbing above $100 a barrel. Inflation concerns linked to supply disruptions and production cuts following the closure of the Strait of Hormuz have intensified, prompting traders to scale back expectations for Federal Reserve rate cuts this year. Markets now anticipate only one 25bps cut, most likely in September, compared with expectations for two cuts just a week ago. Investors are also viewing the US as a relative safe haven, given its greater energy independence, which has provided additional support for the currency. The greenback posted its strongest gains against the euro and the Swiss franc.

DXY increased to 99.68, the highest since November 2025. Over the past 4 weeks, Dollar Index gained 2.97%, and in the last 12 months, it decreased 4.13%.