Dollar Surges to Near 18-Month High as Fed Rate-Hike Bets Drive Best Monthly Gain Since March

The U.S. dollar climbed to its highest level since April 2025 against a basket of currencies on October 1, wrapping up its best monthly performance since March. Rising U.S. Treasury yields and expectations that the Federal Reserve will raise interest rates further drove the move, with the dollar index touching levels near an 18-month high during the session.

The euro was among the hardest hit, with EUR/USD falling to a point where its daily RSI dropped to oversold levels not seen since 2020, raising the prospect of a near-term reversal. Jane Foley of Rabobank said the dollar should remain firm almost by default given the current rate environment.

The dollar's strength is already rippling through crypto and digital-asset markets. Open USD, a new dollar stablecoin backed by Coinbase, Mastercard, Shopify, Stripe, and Visa, launched on September 30 but as of October 1 had not been notified in the MiCA register, limiting what European investors can legally do with it. Separately, Monerium launched a EURe/frxUSD liquidity pool on Polygon, giving users a direct onchain route from its regulated euro token to dollar liquidity via Uniswap v3, a move that takes on added significance as the euro weakens against the dollar.