Dollar soars to three-month high as oil prices surged past $100/barrel

The U.S. dollar surged higher Monday, hitting a three-month high as an escalation in the U.S.-Israel war with Iran sparked a rally in oil prices.

At 03:00 ET (08:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.6% higher to 99.557, climbing to the highest level since late November 2025.

Dollar on a tear

The greenback has been on a tear recently, buoyed by safe haven buying as a surge in oil prices has raised questions about global economic growth going forward.

Crude prices have soared well above $100 a barrel, coming close to the highs seen during the onset of the Russia-Ukraine war in 2022.

Israeli and U.S. airstrikes targeted Iranian oil facilities over the weekend, while Tehran retaliated by launching missile strikes against several oil facilities in Middle Eastern countries.

Iran also effectively blocked the Strait of Hormuz by attacking vessels in the shipping channel, a key source of oil for much of Asia.

That said, oil prices tempered early gains on Monday after a report said the G7 countries will discuss a possible joint release of emergency reserves to offset supply disruptions from the Iran conflict.

Brent oil futures for May surged over 30% to a peak of $119.50 a barrel, while West Texas Intermediate crude futures jumped as much as 30% to an intraday high of $119.43 a barrel earlier in the day.

Both contracts were at highs last seen in mid-2022.

“Until there are clear signs of either the U.S. and Israel being able to prevent further economic chaos in the Middle East, or some kind of ceasefire emerging, we cannot see the dollar staying offered for long,” said analysts at ING, in a note.

“Short dollar positioning also means that in extreme bouts of deleveraging – like what we saw last Tuesday and could perhaps see again today – the dollar is again the beneficiary.”

Euro hit by growth concerns

In Europe, EUR/USD traded 0.8% lower at 1.1525, with the single currency hit hard as oil prices rose given the need for the eurozone to import energy, weighing on growth expectations in the region.

“The longer energy prices stay high, the greater the damage to the 2026 narrative of synchronised global growth and Europe playing catch-up with U.S. exceptionalism,” said ING.

European economic data, released earlier Monday, have already painted a negative picture, as German factory orders slumped 11.1% in January, a sharper fall than the 4.2% expected and a significant drop from the 6.4% growth seen the previous month.

German industrial production also fell 0.5% on the month in January, after dropping 1.0% the prior month.

GBP/USD dropped 0.8% lower to 1.3308, with sterling also hit hard as higher energy prices saw traders desert the currency for the buoyant dollar.