US Dollar Index (DXY) — “Passive Strengthening” Amid Geopolitical Conflicts and Trade Protectionism

The US Dollar Index is currently holding above 100.50, hitting a new high since November 2025. After non-farm payrolls in March came in above expectations, the DXY briefly touched 101.20, before dipping slightly. The forces driving the dollar higher are no longer expectations of Fed rate hikes (because rate hikes are almost impossible), but rather a double boost from geopolitical safe-haven demand + trade barriers.

Safe-haven logic: The fighting in the Middle East continues. Iran refuses to meet with the US in Islamabad, and ceasefire talks have fallen into a stalemate. Global capital is looking for safe assets, with US Treasuries and the dollar becoming the first choice. Although the US itself also faces fiscal deficits and debt issues, in a “race to the bottom” environment, the dollar remains the relatively safest liquidity haven.

Trade logic: The 50% tariffs on steel, aluminum, and copper and the 100% tariffs on pharmaceuticals that Trump signed on April 2 are essentially about “using tariffs to force manufacturing back home.” Tariffs reduce imports and improve the trade deficit, thereby providing support for the dollar in the short term. In addition, economies such as the Eurozone and Japan are hit harder by energy shocks. The euro falls below 1.05 versus the dollar, and the yen versus the dollar moves toward the 160 level, which also indirectly pushes up the US Dollar Index.

Impact on other assets:

· Gold: The dollar’s strength weighs on gold prices, but geopolitical safe-haven demand offsets this, and gold trades in a range of 4,600-4,800 US dollars.
· Cryptocurrencies: BTC has a clear negative correlation with the DXY. If the dollar continues to surge above 102, Bitcoin may test the 62,000 US dollar support again.
· Emerging markets: The dollar’s strength intensifies capital outflows from emerging markets and debt-servicing pressures; investors should be alert to the debt risks of some countries.

In the short term, as long as there is no clear peace agreement in the Middle East, the US Dollar Index is likely to rise rather than fall. From a technical perspective, the DXY has broken above the 100 integer level; the next resistance is at 101.80 (the 2025 high), and the support level is 99.50.

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