Dollar Approaches 18-Month High

DXY increased to 101.61, the highest since June 2026. Over the past 4 weeks, Dollar Index gained 2.02%, and in the last 12 months, it increased 3.84%.

The dollar index strengthened to around 101.5 on Thursday, nearing its highest level since April 2025 as Treasury yields climbed to multi-decade highs amid concerns that persistent energy-driven inflation could lead to tighter monetary policy. The 10- and 30-year US Treasury yields traded around 5.3% and 5.64%, respectively, with both reaching levels not seen since 2002. Oil prices remain elevated as the US and Iran fail to make headway in negotiations despite signs of a recovery in Middle East flows, raising inflationary risks. Meanwhile, data released Wednesday showed the US PCE price index rose 0.3% in August, below expectations for a 0.4% increase, while core PCE advanced 0.2%, also below forecasts of 0.3%. Markets now see roughly a 38% chance of a Federal Reserve rate hike in October, down from 51% before the PCE data. Investors now turn to the latest weekly jobless claims on Thursday and the September jobs report on Friday.

The dollar index slipped to 101.1 on Wednesday as softer-than-expected inflation reinforced expectations that the Federal Reserve may leave interest rates unchanged in October. The headline PCE price index rose 0.3% mom, while core PCE, excluding food and energy, increased 0.2%. At the same time, consumer spending remained resilient, with households continuing to purchase vehicles, furnishings and clothing despite elevated gasoline and other costs. Revised data also showed stronger economic growth, with Q2 GDP now estimated at a 2.2%, up from 1.5%, while Q1 growth was revised higher. Hiring by US companies also strengthened in September, suggesting economic activity remains relatively firm. The government’s employment report due Friday is expected to show a 90K increase in payrolls, providing another key input for the Fed ahead of its October 28 meeting. Despite Wednesday’s decline, the dollar has gained more than 1.5% in September and was little changed over the third quarter.