Dollar Heads for Fourth Straight Weekly Gain as Oil Jumps on Fresh Iran Attacks

The dollar is running up its longest winning streak in more than a year.

The Bloomberg Dollar Spot Index is extending its advance into a fourth week, a gain of nearly 3% over the period and its longest streak since early 2025. Brent crude jumped Thursday, Oct. 8, on fresh attacks from Iran that threaten energy flows in the Middle East. Bloomberg tied the dollar's move to those oil prices weighing on the currencies of energy-importing nations, along with persistent global inflation fears.

Where the currencies stand

A week earlier, on Friday, Oct. 2, the ICE-style dollar index that tracks the greenback against six major rivals stood at 102.08, near a 17-month high. It was set to rise 1% for that week, its third straight weekly gain and the longest run since May 2025, according to figures carried by the Emirates news agency WAM.

The rest of the board that day:

• Euro: $1.1237, hugging its lowest level since May 2025.
• Sterling: $1.3187, near a three-month low.
• Australian dollar: $0.6918, also near a three-month low.
• New Zealand dollar: $0.5591, its weakest since November 2025.
• Yen: steady at 158 per dollar, even after data showed Tokyo core inflation in September accelerating at its fastest pace in 10 months.

The yen held at 158 despite faster inflation in Tokyo. The dollar's strength is not simply a story of other currencies catching a break from their own data.

The Fed is leaning toward more hikes

The rally has a rate story under it as well. The Federal Reserve raised its benchmark rate to a range of 3.75-4.00% on Sept. 16.

On Sept. 24, three Fed officials spoke and all three said more tightening may be needed. New York Fed President John Williams said in London that it is reasonable to expect one more increase this year. Cleveland Fed President Beth Hammack said risks to inflation lean higher and that the longer inflation stays above target, the harder and more costly the return to 2% becomes. Philadelphia Fed President Anna Paulson, a voter this year like Hammack, said further modest increases may be needed.

The dollar index hit 101.40 that day, its highest since late July. It had by then recovered about 90% of what it lost between the late-July top and the August low. Weekly initial jobless claims came in at 197,000 against a forecast of 201,000.

The counterpoint on rate expectations

Not everyone reads the Fed signals as a green light for a still-higher dollar. FXStreet analyst Joshua Gibson wrote on Sept. 24 that it is possible the Fed is further from its next move than the dollar implies. He added that none of the three officials who spoke said so. In his account, futures markets had already been pricing in the tightening since the Sept. 16 hike.

That is a narrow claim. It does not dispute that the officials favor more hikes. It questions how much of that is already in the price.

What a stronger dollar does

A stronger dollar cuts both ways. It makes imports cheaper for American buyers. It also raises the local-currency cost of dollar-priced oil for countries that import energy. That is the squeeze Bloomberg cited for the currencies of energy importers.

Bloomberg's figures and the WAM-reported figures come from different indexes, so the percentage gains are not directly comparable. The Bloomberg gauge is up nearly 3% across four weeks. The six-currency dollar index was up about 1% in the week to Oct. 2 alone.

What to watch

The streak now depends on two things the data cannot settle yet: whether Iran-related attacks keep pushing Brent higher, and whether the Fed delivers the additional hike Williams called reasonable. If oil eases or the Fed pauses, the rally has less to run on. No source has identified a date for the next Fed decision or said how many more increases markets are pricing in.