NEW YORK / RankWire.AI / – On Tuesday, October 13, the US dollar experienced a decline from an 18-month peak, influenced by falling oil prices and a reassessment of the rally driven by artificial intelligence enthusiasm. The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, decreased by 0.25% to 102.27. Earlier, on Monday, it had reached 102.61, marking its highest point since April 2025. Market participants also awaited new guidance from the Federal Reserve concerning US interest rate prospects.
Oil prices declined 0.86% to $105.75 per barrel as traders considered the possibility of increased Russian diesel exports. Russia indicated it might resume diesel shipments beyond the levels outlined by US President Donald Trump in a deal with Moscow. Meanwhile, markets anticipate that Trump will avoid escalation in the Middle East ahead of the upcoming midterm elections. Last week, Trump stated that the US would not attack Iran before the elections and also mentioned an energy ceasefire between Russia and Ukraine on Sunday.
John Velis, Americas macro strategist at BNY, remarked that the dollar weakened slightly due to the decrease in oil prices. He added that earnings reports from large banks showed mixed results, and bond yields had eased from recent peaks. Some analysts suggest that growing doubts about the artificial intelligence investment story are also putting pressure on the dollar rally. Karl Schamotta, chief market strategist at Corpay in Toronto, commented that the US exceptionalism trade had become overextended. Earlier in October, the greenback had already reached a 17-month high against major currencies.
Euro and yen rebound against the US dollar
The euro increased by 0.3% to $1.1189 on Tuesday, recovering from a nearly 17-month low. The currency had dipped to $1.11525 on Monday, its weakest level since May 2025. This rebound occurred despite another rise in gas prices, a key inflation driver for the eurozone. Concerns about France’s fiscal health persisted as well. Recently, rising oil prices had supported the dollar against both the euro and the yen, with both currencies belonging to economies that rely more heavily than the US on imported oil.
Meanwhile, the Japanese yen strengthened by 0.15% to 158.38 per dollar. The euro also appreciated 0.21% against the yen, reaching 177.32 yen. The Australian dollar held steady at $0.6979 after the Reserve Bank of Australia published minutes from its latest monetary policy meeting, revealing a unanimous decision to hike interest rates for the fourth time this year. That September move increased the official cash rate by 25 basis points to 4.60%, with further increases remaining a possibility, according to the minutes.
Focus shifts to inflation data and Federal Reserve guidance
Market participants awaited the release of the US Consumer Price Index for September, scheduled for Wednesday, seeking additional insight into potential Federal Reserve rate hikes. According to CME Group’s FedWatch Tool, traders assigned about an 80% probability that the Fed would keep rates unchanged at its October 27-28 meeting, up from 51% a month earlier. The markets also currently factor in roughly 75 basis points of additional tightening by late 2027. The Fed implemented a quarter-point rate increase in September. Fed Governor Christopher Waller stated that inflation expectations remain firmly anchored.
The September inflation report, released on Wednesday, outperformed expectations, pushing the dollar index to an 18-month peak. However, the dollar retreated again on Thursday, October 15, with the index dropping 0.44% to 102.00 and the euro rising to $1.1210. Officials including Vice Chair for Supervision Michelle Bowman and San Francisco Fed President Mary Daly indicated that the central bank might wait for clearer economic signals. Market attention is also on remarks from Fed Chair Kevin Warsh at the IMF-World Bank annual meetings in Bangkok scheduled for Friday.