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The US dollar index climbed to 102.6, its highest level since April 2025, driven by geopolitical risks in the Middle East, expectations that the Federal Reserve could raise interest rates, and a weakening euro. By 11:40, the index stood at 102.3, after touching 103.02 in April 2025.

Escalating attacks by Iran-backed Houthis in Yemen on Saudi Arabia and strikes on oil tankers have deepened supply concerns, with Brent crude for December delivery reaching $105 per barrel. Higher energy costs are stoking inflation risks and keeping the prospect of a Fed rate increase alive, even as the central bank is expected to pause tightening this month before possibly resuming in December. Cleveland Fed President Beth Hammack said a restrictive policy stance would be appropriate to bring inflation back to 2 percent, while Fed Governor Christopher Waller had signaled a December hike could be on the table.

Ongoing fiscal concerns in France have weighed on the country's assets and raised questions about spillovers across the region, pushing the euro to about 1.11 against the dollar, its lowest level in roughly 17 months. Persistently high US Treasury yields, with the 10-year above 5 percent, have also widened the return advantage in favor of US assets. Tim Waterer of KCM Trade said the dollar is likely to stay strong while oil prices remain elevated, but noted that a fall in oil would probably drag yields and the dollar lower.

Key Takeaways

• The dollar index rose to 102.6, its highest since April 2025, before easing to 102.3.
• Brent crude reached $105 a barrel as Middle East tensions fueled energy supply fears and inflation concerns.
• The euro fell to about 1.11 per dollar, its weakest level in roughly 17 months, on French fiscal worries.