US-Iran war: The US Dollar Index moved closer to the 100 level on Friday, touching an intraday high of around 99.30, even as global crude oil prices climbed amid ongoing tensions between the United States and Iran, which showed little sign of easing.
The index gained 1.3% for the week, marking its strongest weekly rise since mid-November 2024 as rising tensions in the Middle East boosted demand for safe-haven assets.
The index tracks the greenback’s performance against a basket of six major currencies. During periods of heightened global risk, the dollar typically strengthens as investors view it as the world’s primary safe-haven asset — the financial equivalent of parking money in a secure place while still earning returns.
Meanwhile, major global currencies such as the euro and the yen have seen notable weakness. The euro remained broadly stable at $1.161 but is poised to fall about 1.7% for the week. The yen declined 0.2% to 157.83 per dollar, while the British pound inched up 0.02% to $1.3358. At the same time, the Indian rupee slipped to a record low of 92.03 against the US dollar, crossing the crucial 92 level for the first time this week.
Why US Dollar is rising?
According to the SBI Research report, the dollar index began to strengthen as demand for safe-haven assets increased.
“Typically, geopolitical conflict would result in renewed interest in US treasuries. However, this time amidst the US-Israel unrest, the dollar index started to gain with increasing demand for a haven, and the yields on US treasury have also increased,” the report said.
The report further explained that increasing oil prices have raised the fear of energy-driven inflation, making markets expect a higher Fed rate for longer, in turn increasing the 10-year yield above 4%.
Crude oil prices have surged sharply since the escalation of the US–Iran conflict, as markets feared disruptions to global energy supplies from the Middle East. Brent crude, the international benchmark, climbed from around $70.84 per barrel before the conflict to about $93.60 per barrel within a week, marking a rise of 24%.
According to market experts, unlike many economies such as the Eurozone or Japan that rely heavily on oil imports, the US has been a net energy exporter for years. This means higher crude prices may hurt other economies more than the US, making the dollar relatively stronger.
“The USA could emerge as the single (most) beneficiary of the extended war in the Middle East thanks largely to Oil & Gas,” SBI said in its report.
It further said that the US was the largest supplier of LNG to the EU, accounting for almost ~58% of total LNG imports. Imports from the US tripled between 2021 and 2025.
According to the report, with the supply-supply chain triggered squeeze anchoring higher spot and forward prices across Gas and Oil, the US enterprises could reap benefits that more than adequately compensates the spending on war
US Dollar technical outlook
On the technical outlook, brokerage firm Emkay Global said that the US Dollar Index has seen a correction profile in the range of 13–16% since 2011.
“This indicates limited downside potential from hereon. DXY has immediate support at 96.867 and resistance in the range of 100–101,” it said.
On the other hand, Ponmudi R, CEO of Enrich Money, believes that USD/INR continues to trade within its broader ascending channel, currently hovering around 91.85–92.00, after successfully defending the 91.30 support level amid renewed U.S. dollar strength driven by geopolitical risk sentiment.
“The higher-low structure on hourly charts remains intact, with the 91.30–91.50 zone acting as a key structural demand area. A sustained move above 92.00 could trigger further upside toward the 92.30–92.60 range. However, a break below 91.40 may extend the corrective phase toward 91.00, while a deeper trend reversal would only be confirmed if major supports near 90.50 are breached,” Ponmudi said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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