Karishma Vanjani
The greenback is tracking a quarterly gain not seen since late 2024.
The U.S. dollar index -- a gauge measuring dollar's value against its key rivals -- has risen by 1.81% in the first quarter so far. If the gains sustain today, the dollar would wrap up the current quarter with the biggest percentage increase since the fourth quarter of 2024. The index broke past 100 this month, a significant level given the last time it breached 100 on a intraday and closing basis was back in November.
The stellar performance is a reversal for the dollar, which had been down 0.7% for the year before the start of the Iran war. President Donald Trump's desire to control Greenland had revived fears of another trade war, triggering a dollar rout. The dollar's role as a safe haven triggered the rally after the Iran conflict broke out on Feb. 28.
Other currencies with solid safe haven features have been bested. The dollar has gained 1.56% against the Japanese yen and 0.96% versus the Swiss Franc during this quarter, according to Dow Jones Market Data. It helps that the U.S. is a net oil exporter, which pushed up the dollar alongside oil. Gold and Treasuries have also failed to act as primary hedges, leaving the dollar as the dominant safe-haven winner.
Gold is down 11.65% this month, on pace for its worst monthly decline since June 2013. And a popular Treasury fund, the iShares 20+ Year Treasury Bond ETF, while up 4.3% this month is still tracking its worst monthly return since December 2024.
"The dollar remains supported by elevated energy prices, in line with our estimates for a 0.5% to 1% boost for every 10% increase in oil," wrote Themistoklis Fiotakis, the global head of FX & EM macro strategy at Barclays. "But also continues to incorporate a non-trivial risk premium."
This is to say that the dollar is somewhat stronger than fundamentals alone justify -- and for traders looking to chase the dollar rally, that's important to know. If the situation with Iran stabilizes, the White House goes back to focusing on the issues within the U.S. borders, and if there comes a clarity on U.S. growth, the dollar risk premium could evaporate.
It likely implies "a degree of softness in the near term, per our new forecasts," Fiotakis wrote in a note this weekend. His group estimates a euro to be near $1.18 in the next quarter. Currently the euro trades at $1.15. The more dollars needed to buy a euro, the weaker the dollar.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 31, 2026 12:28 ET (16:28 GMT)
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