Dollar Extends Advance as Geopolitical Risks Lift Demand

what happened

Trading Economics reported that the dollar index climbed to 102.4 on Monday, adding to a 0.3% rise recorded last week. The greenback remained close to its strongest level since April 2025.

The currency was supported by intensifying geopolitical tensions in the Middle East. The Houthis continued attacks on Saudi Arabia, while Ukrainian President Zelenskiy accused Russia of breaching an energy ceasefire announced by US President Trump after a strike on a thermal power plant in Kharkiv.

Oil prices remained volatile against this backdrop. Investors are awaiting US CPI and PPI figures due this week, which are expected to offer more information about inflationary pressure. Markets broadly anticipate that the Federal Reserve will leave rates unchanged at its October meeting, while pricing in another increase in December. The Fed last raised borrowing costs in September, its first rate hike since 2023.

why it matters

Currency, oil and interest-rate markets are likely to remain sensitive to both geopolitical developments and the upcoming US inflation data. The figures may shape expectations around the Federal Reserve’s next decisions.

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