The dollar jumped Wednesday as higher oil prices and heightened tensions in the Middle East prompted investors to flock to safety.
The Bloomberg Dollar Spot Index rose as much as 0.5% alongside oil after a pickup in Iranian attacks on vessels in the Strait of Hormuz. The gauge is approaching a new peak this year. Nearly all currencies in the Group of 10 have weakened against the greenback with the euro lagging behind all its major peers.
“The dollar is acting as a counter-cyclical, attracting safe haven flows as other asset classes sell off,” Kathleen Brooks, research director at XTB, wrote in a note.
Stocks ended a record-breaking run Wednesday, with the benchmark S&P 500 Index down from an all-time high, while Brent crude topped $102.
Rising energy prices, France’s fiscal challenges and fresh political risks in the region are putting pressure on the euro. The common currency fell to $1.12, down 0.6% on Wednesday. Earlier this week, the euro touched the lowest level since May 2025.
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“The dollar is looking like the best of the bunch in the current environment,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “Only the brave are going to want to load up on the euro at this moment and the market is favoring short pound positions ahead of the Oct. 28 UK budget, while in Japan it may be another couple of months before the Bank of Japan hikes rates.”
Traders will be turning their attention to the release of the Federal Reserve’s September meeting minutes, which could offer confirmation of further monetary tightening. Last month, the central bank boosted interest rates for the first time in three years. Since then several Fed officials have said more needs to be done to tame inflation.