The DXY dollar index broke through the 102.50 level and reached its highest since April 2025. Since the September 9 low, the index has risen by about 4%. The dollar is also heading for its fourth consecutive rising week.
Why the 102.50 level matters
The 102.50 mark stopped the rally several times in early October. Now this level has been passed. At the same time, pullbacks within the current move remain above previous lows, which preserves the upward structure.
Who is driving the index
DXY is calculated based on a basket of six currencies. The main weight falls on the euro and the Japanese yen. Together they account for about 71% of the index. It was the movement of these two currencies that provided most of the dollar's rise from the low of the current week.
Why the dollar has regained support
The main factor was a new wave of geopolitical tension. Earlier, a statement appeared about a possible halt to strikes on Russia's and Ukraine's energy infrastructure. Against this backdrop, Brent quickly dropped below $103 per barrel. But after that, new reports appeared about strikes on energy facilities. The market again began to price in elevated risks.
Oil has returned above $107
After the initial drop, Brent recovered and rose above $107 per barrel. This is the highest level in more than two weeks. The situation around the Strait of Hormuz is creating additional pressure on the market. New attacks on tankers are intensifying fears for oil supplies from the Persian Gulf.
How this is connected to the dollar
Rising geopolitical risks support demand for safe-haven assets. The dollar remains one of the main beneficiaries of such demand. Additionally, expensive oil amplifies inflation fears and supports the scenario of a longer period of high rates. This also plays in favor of the American currency.
Why the euro and the yen are especially important
Due to their large weight in DXY, it is EUR/USD and USD/JPY that most strongly reflect the index's movement. If the euro and the yen continue to weaken against the dollar, DXY receives an additional upward impulse. Therefore, new headlines on oil, energy, and geopolitics are now reflected especially quickly in these pairs.
What's next
The main question is whether DXY will hold above 102.50. If the level consolidates as support, the market may continue moving toward new highs. If geopolitical tension eases and oil goes down again, part of the safe-haven demand for the dollar may weaken. For now, the structure remains in favor of the American currency.
Did you trade the dollar on these headlines?
Four weeks of one-way movement and daily geopolitical news create a convenient but challenging market. For a prop trader, not only the entry matters, but also the available trading nominal. In prop trading, a trader passes a paid skill evaluation, gains access to the company's trading account, and works according to pre-established profit distribution rules. It's better to understand the mechanics in advance, before the next series of sharp moves.