NEW YORK / RankWire.AI / – The U.S. Dollar Index fell 0.25% to 102.27 on Tuesday, October 13, pulling back from its strongest level in 18 months. The index, which tracks the greenback against six major currencies, had climbed to 102.61 on Monday. That reading was its highest since April 2025. Lower oil prices and a reassessment of the artificial intelligence-driven rally weighed on the US currency. Investors also waited for fresh signals on the path of US interest rates.
Crude prices slid 0.86% to $105.75 per barrel during Tuesday’s session. Traders assessed the possibility of extra Russian diesel supplies reaching the market. Moscow said it could restore diesel exports above the levels set out by US President Donald Trump in a deal with Russia. Investors also expect Trump to avoid escalation in the Middle East before next month’s midterm elections. Trump said last week that the US would not attack Iran before the vote and referred on Sunday to an energy ceasefire between Russia and Ukraine.
Expensive oil had recently lifted the dollar against the euro and the yen. Both currencies are linked to economies that rely far more heavily on imported oil than the US. BNY strategist John Velis said slightly lower oil left the dollar a little weaker. He added that big bank earnings were mixed while bond yields traded slightly below recent highs. The dollar had reached a 17-month high earlier in October after a surge in Treasury yields.
Euro climbs from its weakest level since May
The euro advanced 0.3% to $1.1189 on Tuesday. It had dropped to $1.11525 a day earlier, the lowest level for the single currency since May 2025. The gain came even as gas prices, a key driver of inflation in the eurozone, jumped again. Worries about France’s fiscal position also remained in place. Against the Japanese currency, the euro rose 0.21% to 177.32 yen. The yen itself firmed 0.15% to 158.38 per dollar.
The Australian dollar traded at $0.6979 after the Reserve Bank of Australia published minutes from its latest meeting. The record showed that board members unanimously backed a fourth interest rate increase this year. The September move raised the official cash rate by 25 basis points to 4.60%. Analysts also noted growing doubts about the AI-driven investment story behind demand for US assets. Corpay chief market strategist Karl Schamotta said the US exceptionalism trade had again become overextended and vulnerable to a technical pullback.
Fed rate outlook shapes next dollar move
Traders turned to the September Consumer Price Index, scheduled for release on Wednesday, for signs of further Federal Reserve tightening. CME Group’s FedWatch Tool showed about an 80% probability of no change in rates at the October 27-28 meeting, compared with 51% a month earlier. Markets still priced in about 75 basis points of tightening by late 2027. The Fed delivered a rate hike in September. Governor Christopher Waller said inflation expectations remained well anchored.
Wednesday’s inflation data came in hotter than expected and pushed the dollar index to another 18-month high. The greenback then pulled back on Thursday, October 15, as the index dropped 0.44% to 102.00. The euro recovered to $1.1210 on the same day. Fed officials including Michelle Bowman and Mary Daly said the central bank could wait for more clarity before its meeting. Markets now look to Fed Chair Kevin Warsh’s remarks at the IMF-World Bank annual meetings in Bangkok on Friday.