NEW YORK / RankWire.AI / – The US dollar retreated from an 18-month high on Tuesday, October 13, as falling oil prices and a reassessment of the artificial intelligence-driven rally weighed on the currency. The U.S. Dollar Index, which measures the greenback against a basket of six major currencies, slid 0.25% to 102.27. The index had reached 102.61 on Monday, its highest level since April 2025. Investors also awaited fresh signals from the Federal Reserve on the outlook for US interest rates.
Oil prices fell 0.86% to $105.75 per barrel on Tuesday as traders weighed the prospect of additional Russian diesel supplies. Russia said it could restore diesel exports beyond the levels outlined by US President Donald Trump in a deal with Moscow. Markets also expect Trump to avoid escalation in the Middle East ahead of next month’s midterm elections. Trump said last week that the US would not attack Iran before the elections. He also mentioned an energy ceasefire between Russia and Ukraine on Sunday.
John Velis, Americas macro strategist at BNY, said the dollar was a little weaker on slightly lower oil. He noted that earnings from large banks were mixed and that bond yields had eased from recent highs. Some analysts said growing doubts about the artificial intelligence investment story were also challenging the dollar rally. Karl Schamotta, chief market strategist at Corpay in Toronto, said the US exceptionalism trade had become overextended. The greenback had already climbed to a 17-month high against major currencies earlier in October.
Euro and yen recover against the greenback
The euro rose 0.3% to $1.1189 on Tuesday, rebounding from a roughly 17-month low. The single currency had touched $1.11525 on Monday, its weakest level since May 2025. The recovery came despite another jump in gas prices, a key driver of eurozone inflation. Concerns over France’s fiscal outlook also persisted. Rising oil prices had recently supported the dollar against the euro and the yen. Both currencies belong to economies that depend far more than the US on imported oil.
The Japanese yen strengthened 0.15% to 158.38 per dollar. The euro also gained 0.21% against the yen to 177.32 yen. The Australian dollar stood at $0.6979 after the Reserve Bank of Australia released minutes from its latest policy meeting. The minutes showed that the board unanimously agreed to raise interest rates for the fourth time this year. That September decision lifted the official cash rate by 25 basis points to 4.60%. The record indicated that further increases remained possible.
Inflation data and Fed signals in focus
Investors awaited the US Consumer Price Index for September, due on Wednesday, for further clues on possible Federal Reserve tightening. Traders saw about an 80% chance that the Fed would leave rates unchanged at its October 27-28 meeting, up from 51% a month earlier, according to CME Group’s FedWatch Tool. Markets still priced in about 75 basis points of tightening by late 2027. The Fed delivered a quarter-point rate increase in September. Fed Governor Christopher Waller said inflation expectations remained well anchored.
The September inflation report came in stronger than expected on Wednesday and lifted the dollar index to a fresh 18-month high. The currency then retreated again on Thursday, October 15, with the index falling 0.44% to 102.00 and the euro rising to $1.1210. Fed officials including Vice Chair for Supervision Michelle Bowman and San Francisco Fed President Mary Daly said the central bank could wait for more clarity. Investors are watching remarks from Fed Chair Kevin Warsh at the IMF-World Bank annual meetings in Bangkok on Friday.