Philip Wee at DBS Group Research observes that the US Dollar Index (DXY) has exhibited a limited haven response to the recent oil shock, with Brent crude trading in a USD 100–120 range during Q1 2026 [1]. Despite this significant spike in oil prices, the DXY has remained within its established 96–101 band, a range it has held since mid-2025 [1]. This muted reaction contrasts with previous energy shocks, particularly in 2022, when the USD's haven status was more pronounced [1].
Wee attributes the subdued movement of the DXY to several factors: a less urgent Federal Reserve (Fed), tighter policy relative to inflation, and fading enthusiasm for the so-called Trump Trade [1]. The Fed's current wait-and-see stance on interest rates, as opposed to the urgency seen in 2022 to address rising inflation, has prevented the DXY from extending its rise above 100 despite the oil price surge [1].
The analysis suggests that the market's expectation for aggressive Fed action in response to inflation driven by demand has diminished, resulting in a more stable dollar index even amid heightened energy prices [1].
CONCLUSION
The US Dollar Index has remained stable within its 96–101 range despite a sharp rise in Brent crude prices during Q1 2026. This reflects a less urgent Federal Reserve and reduced haven demand for the USD compared to previous energy shocks. Market participants appear to be awaiting clearer signals from the Fed before driving further dollar strength.