US Dollar Index Approaches 18-Month High Ahead of US CPI Data
nashnova research
The dollar index rose to 102.39 on Monday, approaching an 18-month high on Middle East safe-haven demand and rate expectations; Wednesday's CPI print will decide whether the bull run extends.
Why is the dollar still climbing?
The dollar index edged up 0.16% to 102.39, close to last week's 18-month high.
Two forces are lifting it at once: Middle East risk is driving safe-haven buying, and the market is waiting for Wednesday's CPI to set the rate direction.
This means → the dollar is propped up by both fear and rate expectations, leaving limited room for a near-term pullback.
How is the Middle East situation moving markets?
Yemen's Houthi rebels stepped up strikes on Saudi Arabia; two more oil tankers were attacked over the weekend, keeping the geopolitical risk premium elevated.
Brent crude rose 2.09% to $106.80 per barrel, up roughly 45% from pre-conflict levels.
Trump's Russia-Ukraine "energy ceasefire" deal did little to cool prices. In plain terms = the war premium is already baked in, and a single ceasefire announcement is not enough to pull it out.
How much money is betting on a stronger dollar?
CFTC data show net long dollar positions reached roughly $36 billion as of October 7.
Three weeks earlier, the figure was only about $8.4 billion; the increase came mainly from euro shorts.
This means → speculative capital piled into long-dollar bets in a very short window, and crowding is now visibly elevated.
Why is Wednesday's CPI the pivotal print?
The Fed raised rates last month for the first time in two years. CME's rate tool now prices an 81% probability of no change this month, up from 51% a month ago.
Analysts note: a hotter-than-expected core CPI → lifts rate-hike expectations → extends the dollar's run above 102. A softer print, by contrast, would do only limited damage.
In plain terms = the bullish script has a catalyst; the bearish script lacks a trigger — the risk balance tilts toward further dollar strength.
How are other major currencies faring?
The euro fell 0.19% to $1.1180, marking its fifth straight weekly decline; fiscal concerns ahead of France's 2027 presidential election continue to weigh on it.
Dollar-yen edged up to 158.57 in thin holiday trading in Japan.
Sterling was broadly flat at $1.323. This reflects the market's attention locked on the dollar-euro axis, with the pound sidelined for now.
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