US Dollar Forecast: DXY Rises as Hormuz Crisis Deepens
By James Hyerczyk | Updated: Mar 13, 2026
Key Points
- The US Dollar Index (DXY) is climbing due to heightened Middle East tensions and rising oil prices, which are driving safe-haven demand.
- Rising Treasury yields are supporting the dollar as investors sell bonds in anticipation of higher inflation risks.
- Short-covering is adding momentum as investors adjust their positions following delayed expectations for Federal Reserve rate cuts.
Current Market Analysis
The U.S. Dollar is trading higher against a basket of major currencies, surpassing the recent high of 99.695, with a target of 100.395. As of 08:25 GMT, the DXY is at 100.271, reflecting a 0.53% increase.
Several factors are contributing to the dollar's strength, including traditional safe-haven demand, increasing Treasury yields, and postponed Fed rate cuts. The ongoing conflict in the Middle East, particularly concerning oil prices, is a significant catalyst for this movement.
Impact of Middle East Tensions
The Strait of Hormuz, a critical shipping route for global oil supply, is under scrutiny as disruptions could lead to higher energy prices and inflation. This scenario typically drives demand for the dollar, as it is viewed as a stable investment during geopolitical unrest.
Analysts warn that rising oil prices could create a "toxic mix" for the global economy, characterized by increased inflation and slower economic growth, further enhancing the dollar's appeal.
Federal Reserve Rate Cuts
Inflation concerns are pushing back the timeline for the first rate cut in 2026, with expectations now leaning towards September. This shift has led traders to adjust their positions, contributing to the dollar's strength as they unwind previous bearish bets.
Conclusion
With sufficient momentum, the DXY may surpass the 100.395 level, potentially triggering further upward movement towards 101.977, as there is no significant resistance in that range. The U.S. position as the largest oil exporter also provides an edge to the dollar compared to other major currencies.