The dollar index climbed nearly 1% on Monday, marking its strongest single-day performance in seven months, according to a Reuters report. The rally was broad-based, with the greenback gaining against major peers as investors sought safety amid fears of further escalation.
The rebound comes after months of scepticism about the dollar’s crisis-era appeal. That doubt had taken hold last year when the currency failed to strengthen during a tariff-driven global sell-off triggered by Washington’s sweeping trade measures announced on April 2, 2025, an event that market participants had dubbed “Liberation Day”. During that episode, the dollar’s muted response raised concerns that its reflexive safe-haven bid might be weakening.
This time, however, the script appears different. Analysts told Reuters that the depth and liquidity of U.S. financial markets remain a decisive advantage. In periods of acute stress, the U.S. Treasury market is seen as the only venue capable of absorbing massive global flows. When investors rush into Treasuries, demand for the dollar naturally follows.
The lack of viable alternatives also bolstered the currency’s appeal. While the euro, the yen and gold attracted safe-haven interest in recent months, the scale and accessibility of U.S. markets make it difficult for global investors to sidestep the dollar entirely during large-scale de-risking, investment managers said.
Why the Dollar Stumbled Before
Market participants believe last year’s unusual weakness in the dollar during turbulence stemmed from the origin of the risk itself. Because the shock was generated by U.S. policy, namely aggressive tariff measures, investors were reluctant to seek refuge in the very currency linked to the uncertainty. Analysts noted that the episode temporarily dented the dollar’s central role in global finance, encouraging investors to rotate towards non-U.S. assets.
In contrast, the current tension is geopolitical and external in nature. When instability arises outside U.S. policy actions, the dollar’s defensive qualities tend to resurface. Strategists told Reuters that Monday’s market behaviour reinforced the view that the greenback’s haven appeal remains intact in internationally driven crises.
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Energy Dynamics Add Support
Another factor supporting the dollar’s rally was the United States’ position as a net energy exporter. Rising oil prices often hurt energy-importing economies, pressuring their currencies. The U.S., however, is relatively insulated from such shocks compared with Europe or Japan. Reuters reported that this dynamic added a structural tailwind to the dollar during the recent spike in crude prices.
That said, not all market watchers are convinced the dollar’s haven status is permanently secure. Some analysts cautioned that the debate over the greenback’s long-term resilience is far from settled. High U.S. fiscal deficits, policy volatility and heavy global exposure to American assets could, under certain types of shocks, alter traditional correlations.
In particular, if future turmoil stems from broad economic fears rather than energy disruptions or liquidity stress, the dollar may not respond as decisively. Portfolio managers told Reuters that in a generalised growth scare, the currency could behave more like a risk asset than a haven.
Oil Holds the Key
Looking ahead, oil prices may prove decisive. Macro strategists said that if crude continues climbing and risk appetite remains subdued, the dollar is likely to retain its bid. Conversely, if oil retreats and tensions ease, classic safe-havens such as the Swiss franc and the Japanese yen could reassert themselves.
For now, though, the dollar’s performance has delivered reassurance to investors. In a week marked by airstrikes, oil spikes and heightened geopolitical anxiety, the greenback has reminded markets why it has long been considered the world’s ultimate financial refuge.
