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Source: Newsmaker.id
The US Dollar (USD) remained relatively stable against a basket of major currencies during Wednesday’s trading session (October 21, 2026), as escalating geopolitical tensions in the Middle East fueled renewed demand for safe-haven assets. The US Dollar Index (DXY) held steady around the 101.70 level, following a decline of nearly 0.3% in the previous session—during which it touched 101.50, its lowest point since October 1. The ongoing conflict involving the US, Israel, and Iran, which shows no signs of resolution, has heightened concerns regarding global energy supplies. Global oil prices surged by more than $2 per barrel after Iran indicated little prospect for diplomatic progress with Washington; this intensified inflationary fears and provided support for the US Dollar.
In the foreign exchange market, the Euro weakened by 0.1% to $1.122, pressured by growing political uncertainty and deteriorating fiscal conditions in France, which pushed the French government’s borrowing costs toward their highest level in 24 years. Conversely, the British Pound rose 0.1% to $1.338 after UK inflation figures exceeded expectations, strengthening the likelihood of an interest rate hike by the Bank of England in November. The Japanese Yen also strengthened to around 157.96 per US Dollar, bolstered by signals from the Bank of Japan regarding the potential for further monetary tightening. Meanwhile, the Australian Dollar climbed 0.4% to $0.703, reaching a three-week high after officials from the Reserve Bank of Australia warned of a worsening inflation outlook.
Despite the support derived from increased demand for safe-haven assets, the US Dollar’s gains were tempered by a decline in US Treasury yields, amid concerns surrounding the valuations of technology stocks and the outlook for investments in artificial intelligence (AI). Investors are currently closely monitoring the financial reports of major technology companies, developments in the Middle East conflict, and the direction of the Federal Reserve’s interest rate policy. In Asia, the Indonesian rupiah weakened slightly by 0.1% after Bank Indonesia kept its benchmark interest rate unchanged for the fourth consecutive time, while opting to raise the Deposit Facility rate. These conditions indicate that the movement of the US dollar remains influenced by a tug-of-war between rising geopolitical risks, inflationary pressures, and a decline in US Treasury yields.
Newsmaker’s Point of View
The current movement of the US dollar suggests that the Middle East conflict is a primary pillar of support for the greenback, though not yet strong enough to drive a sustained rally. A surge in oil prices could keep US inflation elevated and reinforce expectations for a hawkish Federal Reserve interest rate policy. Conversely, falling US Treasury yields diminish the dollar’s appeal in terms of returns. These two opposing factors have caused the DXY (US Dollar Index) to enter a phase of consolidation.
From a technical perspective, the 101.50 level serves as a key support for the US Dollar Index. Should the DXY break above 102.00, it could open the door for a move toward 102.30. Conversely, a decline below 101.50 could push the index to retest the 101.00 area. These technical scenarios remain subject to confirmation through actual price action.
Newsmaker’s Conclusion: The US dollar may continue to find support from geopolitical tensions and high energy prices. However, its future direction will largely depend on shifts in US bond yields and expectations regarding Federal Reserve policy. For gold, a weaker dollar and lower yields could pave the way for a recovery; meanwhile, for the Indonesian rupiah, increased demand for the US dollar—sought as a safe-haven asset—could exert renewed pressure on the domestic exchange rate. (yds)
Source: Newsmaker.id