Dollar slips, geopolitical escalation risks seen limited before midterms
SPY•The dollar index fell 0.25% to 102.29 as oil prices eased and investors focused on the Federal Reserve’s rate path and Wednesday’s US inflation data. Traders priced an 80% chance the Fed will hold rates this month, while the euro and yen advanced against the dollar.
1. Dollar eases as oil retreats
The dollar slipped from an 18-month high on Tuesday as oil prices retreated and investors weighed the Federal Reserve’s rate path. The dollar index fell 0.25% to 102.29 after reaching 102.61 on Monday, its highest since April 2025. Investors were also watching Wednesday’s September consumer price index reading for clues about possible Fed tightening.
2. Currencies make gains
The euro rose 0.34% to $1.1193, recovering from a roughly 17-month low, while the yen strengthened 0.28% to 158.16 per dollar. The euro’s rebound came despite higher gas prices and persistent concerns about France’s fiscal outlook. The yen’s gains followed data showing Japan’s wholesale prices rose 6.8% in the year to September, below the 7.6% median market forecast.
