US Dollar Index declines after reaching 18-month peak

The US Dollar Index (DXY) has slipped back under 102.00, falling below Monday's low after reaching an 18-month high just above 102.50. This retreat comes as lower bond yields in Europe and the US ease borrowing costs, particularly for France, where the spread between French and German 10-year debt yields narrowed to about 1.3 percentage points from over 1.5 on Friday.

The Euro, which makes up more than half of the Dollar Index, has rebounded from its weakest level since May 2025. Meanwhile, Brent Crude Oil dropped below $98 a barrel, partly due to a Group of Seven (G7) decision to release 100 million barrels of emergency oil stocks over four months. This release is roughly equivalent to five days of oil flow through the Strait of Hormuz before the war.

Investors appear to be shifting toward riskier assets, as evidenced by the S&P 500 hitting a record high, albeit narrowly driven by tech giants like Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT), which now account for more than 21% of the index. However, the Russell 2000, representing smaller companies, has seen little gain. The US Dollar Index is currently trading near 101.85, with momentum indicators turning down since late September, though it remains well above its 50-day Exponential Moving Average (EMA) near 100.35.