Dollar index approached 18-month peak: Oil, Fed and Euro impact

The dollar index is hovering near the highest levels of the last 18 months due to the impact of uncertainties in global markets.

Index; It measures the performance of the US dollar against the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona.

Tension in West Asia, rising energy prices and expectations that the Fed may tighten monetary policy again support the demand for the dollar.

OIL HAS SEEN 105 DOLLARS

Increasing tension in West Asia has strengthened concerns about global energy supply.

The Iranian-backed Houthis in Yemen have increased their attacks on Saudi Arabia and the targeting of oil tankers has increased the risks regarding energy shipments.

The barrel price of December delivery Brent oil reached 105 dollars, strengthening the expectation that the pressure of high energy costs on inflation may continue.

The rise in energy prices was also reflected in the pricing of the Fed's interest rate policy.

TIGHT MONETARY POLICY MESSAGES FROM FED

Statements from Fed officials supported the expectation that interest rates could remain high for a long time or be increased again.

Cleveland Fed President Beth Hammack said that a restrictive monetary policy stance is appropriate to return inflation to the 2 percent target.

Fed Board Member Christopher Waller also gave a message in his evaluation at the Istanbul Economic Forum last week that the policy rate could be increased in December.

The concern that the increase in energy prices may accelerate inflation again keeps alive the expectation that the Fed may move towards a new interest rate increase instead of easing.

EURO IS AT LOWEST LEVEL IN 17 MONTHS

Another development that supported the rise in the dollar index was the depreciation of the Euro.

While concerns about financial problems in France put pressure on the country's assets, concerns that risks could spread to other European countries also negatively affected the common currency.

Euro/dollar parity fell to 1.11, reaching its lowest level in approximately 17 months.

Due to the high weight of the euro in the dollar index, the depreciation in the common currency supported the upward movement of the index.

US BONDS RATES ARE OVER 5 PERCENT

The fact that US bond interest rates remain at high levels is also among the factors that increase the demand for the dollar.

The fact that the US 10-year bond interest rate is above 5 percent strengthens the return advantage of dollar-denominated assets.

High bond interest rates encourage investors to turn to the dollar and US assets.

DOLLAR INDEX REACHED 102.6

With geopolitical risks, expectations regarding the Fed's interest rate policy and the weakening of the Euro, the dollar index reached 102.6, its highest level since April 2025.

While the index was at 102.3 as of 11.40, it rose to 103.02 in April 2025.