DXY: Limited haven response to Oil shock – DBS

Philip Wee at DBS Group Research highlights that despite Brent crude trading in a USD 100–120 range in Q1 2026, the US Dollar Index (DXY) has stayed within its established 96–101 band. He attributes the US Dollar's (USD) muted haven response to a less urgent Federal Reserve (Fed), tighter policy relative to inflation, and fading enthusiasm for the so‑called Trump Trade.

Dollar rangebound despite Oil spike

"Stepping back to look at the broader trend since early 2026, the DXY Index was surprisingly muted compared to previous energy shocks."

"Despite Brent crude’s spike into a $100-120 range in Q1, the DXY held the 96-101 range set since mid-2025."

"We noted that the USD’s haven status during this oil shock was significantly lower than in 2022."

"Unlike in 2022, the Fed has no urgency to catch up with rising inflation driven by demand."

"Hence, the DXY is not rushing to extend its rise above 100 today, held back by a Fed with a wait-and-see stance on interest rates."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)