The US dollar remained close to its highest level in 18 months on Monday, October 12, as escalating tensions in the Middle East supported demand for the currency, while investors awaited key US inflation figures that could influence the Federal Reserve's next interest-rate decisions.
The dollar index, which measures the US currency against six major counterparts, rose approximately 0.2% to 102.43, remaining near the 18-month high reached last week. Investor positioning has also become increasingly bullish, with net long dollar positions climbing to around $36 billion in the week ending October 7, compared with $8.4 billion three weeks earlier.
Geopolitical uncertainty remained a major driver of currency movements following renewed attacks involving Saudi Arabia and disruptions to oil shipments in the region. Brent crude traded around $104 per barrel, keeping concerns over energy-driven inflation and global economic stability in focus.
Attention is now shifting toward Wednesday's US consumer price index report, which could provide fresh indications about the Federal Reserve's monetary policy outlook. The central bank raised interest rates in September for the first time since 2023, but traders currently see a limited probability of another increase at its October meeting.
According to CME FedWatch data, markets were pricing in approximately an 81% probability that the Federal Reserve would leave interest rates unchanged this month, although stronger-than-expected inflation could increase expectations for additional tightening later in the year.
Among major currencies, the euro weakened approximately 0.2% to $1.1176, pressured by concerns over France's fiscal position and rising European borrowing costs. The US dollar traded near 158.61 against the Japanese yen, while the British pound remained relatively stable around $1.323.
Meanwhile, the Indian rupee strengthened more than 1% to approximately 95.7 per dollar following central bank measures aimed at easing pressure on the currency.
The dollar's resilience highlights how geopolitical risks, inflation concerns and shifting interest-rate expectations continue to influence global foreign exchange markets, with upcoming US economic data likely to determine the currency's near-term direction.
