NEW YORK / RankWire.AI / – U.S. Dollar Index decreased 0.25% to 102.27 on Tuesday, October 13, retreating from its highest point in 18 months. The index, which measures the greenback against six major currencies, reached 102.61 on Monday. That was its peak since April 2025. Falling oil prices and a reassessment of the artificial intelligence-driven rally put downward pressure on the US dollar. Investors also awaited new signals on US interest rate trajectories.
Crude oil prices declined 0.86% to $105.75 per barrel during Tuesday’s session. Market participants evaluated the potential for additional Russian diesel exports to hit the market. Moscow indicated it could resume diesel shipments above the levels set by US President Donald Trump in a deal with Russia. Meanwhile, investors expect Trump to avoid escalation in the Middle East before the upcoming midterm elections next month. Trump announced last week that the US would not attack Iran before the vote and mentioned a ceasefire on energy between Russia and Ukraine on Sunday.
The recent surge in oil prices had supported the dollar against the euro and yen. Both currencies are linked to economies more heavily dependent on imported oil than the US. According to BNY strategist John Velis, slightly lower oil prices left the dollar somewhat weaker. He also noted that big bank earnings were mixed, while bond yields traded just below recent highs. Earlier in October, the dollar reached a 17-month high after Treasury yields surged.
Euro recovers from its lowest level since May
The euro rose 0.3% to $1.1189 on Tuesday. It had fallen to $1.11525 the day before, the lowest since May 2025. The increase happened despite gas prices, a key inflation factor in the eurozone, rising again. Concerns about France’s fiscal health also persisted. Against the Japanese yen, the euro gained 0.21% to 177.32 yen. The yen itself strengthened 0.15% to 158.38 per dollar.
The Australian dollar traded at $0.6979 following the release of minutes from the Reserve Bank of Australia’s latest meeting. The minutes revealed that members unanimously supported a fourth interest rate hike this year. The September increase raised the official cash rate by 25 basis points to 4.60%. Analysts also expressed growing doubts about the AI-driven demand for US assets. Corpay chief market strategist Karl Schamotta stated that the US exceptionalism trade had become overextended and was vulnerable to a technical correction.
Federal Reserve rate outlook influences the next dollar move
Market participants are focusing on Wednesday’s September Consumer Price Index for clues on further Federal Reserve tightening. CME Group’s FedWatch Tool indicated about an 80% chance of no rate change at the October 27-28 meeting, up from 51% a month earlier. Markets continue to price in around 75 basis points of additional tightening by late 2027. The Fed implemented a rate hike in September. Federal Reserve Governor Christopher Waller said inflation expectations remain well anchored.
Wednesday’s inflation data came in hotter than expected, pushing the dollar index to an 18-month high. However, the greenback retreated on Thursday, October 15, dropping 0.44% to 102.00. The euro rebounded to $1.1210 the same day. Officials including Michelle Bowman and Mary Daly suggested the Fed might wait for more clarity before its next move. Investors are now awaiting remarks from Fed Chair Kevin Warsh at the IMF-World Bank annual meetings in Bangkok on Friday.