Initially, the dollar strengthened due to demand for it as a defensive asset amid the escalation of the US-Israeli war with Iran, which triggered a rise in oil prices. After Trump’s comments, the dollar fell sharply.
Yesterday, the dollar index, which tracks the U.S. currency against a basket of six other currencies, fell 0.1 percent to 99.557. The index offset a 0.6% gain that had earlier pushed it to its highest level since late November 2025, according to investing.com.
The dollar is rising rapidly
The dollar has been surging lately, fueled by safe haven asset purchases as a surge in oil prices raises questions about continued global economic growth.
On Friday, the dollar index posted its best weekly performance since early August 2025.
“The dollar index has strengthened significantly in a short period of time, so it may now need to consolidate before it can rise significantly. It tested the 100.00 level as resistance several times last year, with the most concentrated attack coming in November. Each time it has been rebuffed,” said David Morrison, senior market analyst at Trade Nation.
“Thus, the dollar index needs to accumulate significant upward momentum to have a decent chance of breaking through that level this time around. While it looks like the U.S. dollar may have finally bottomed, if the dollar index fails to break through the 100.00 level, a retest of the January lows near 95.25 cannot be ruled out,” Morrison said.
Oil prices earlier soared to nearly $120 a barrel, approaching the highs seen at the start of the Russia-Ukraine war in 2022. However, they leveled off those gains for much of the day before falling sharply after President Trump told CBS television that the war was “virtually over” and that the situation was “significantly” ahead of his administration’s initial forecast of four to five weeks.
