The US Dollar Index (DXY) slipped from its 18-month high, with Monday's bar topping out just above 102.50—the highest since April 2025—before retreating below 102.00 and Monday's low on Tuesday. The index reached the 101.75 area and is currently trading near 101.85, which is less than a fifth of the rally from the September 9 low near 98.60. Despite the pullback, the DXY remains well above its 50-day Exponential Moving Average (EMA) near 100.35. Momentum indicators have broadly turned down since late September, signaling a potential shift in trend direction [1].
The Euro, which constitutes more than half of the Dollar Index, rebounded from Monday's low—its weakest since May 2025. All other currencies in the index, except the Yen and Swiss Franc, have gained against the Dollar. The Yen and Swiss Franc are typically favored by investors during periods of market uncertainty [1].
Investor sentiment has shifted towards risk, as evidenced by the S&P 500 reaching a record high. However, this record is described as narrow, with Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) now accounting for more than 21% of the S&P 500's value, while the Russell 2000 index of smaller companies is only marginally higher. This suggests that gains are concentrated among a few large-cap technology stocks [1].
In related markets, Brent crude oil prices fell below $98 a barrel as Gulf exports increased and bond yields in Europe and the US declined. France experienced notable relief, with the yield spread between its 10-year debt and Germany's narrowing to about 1.3 percentage points from over 1.5 on Friday. The decline in oil prices was partly attributed to the Group of Seven (G7) releasing 100 million barrels of emergency stocks over four months, equivalent to about five days of pre-war shipments through the Strait of Hormuz [1].
CONCLUSION
The US Dollar Index has retreated from its recent 18-month high as risk appetite returns and the Euro rebounds. While the S&P 500 reached a new record, gains remain concentrated in a few large technology stocks. Market sentiment appears cautiously optimistic, but momentum indicators suggest the Dollar's rally may be losing steam.