Dollar Holds Firm as Oil Surge Revives Rate Fears

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On May 18, 2026, the dollar steadied as soaring oil prices and a deepening bond selloff revived fear of tighter global monetary policy. Traders also tracked renewed weakness in the yen as intervention risks resurfaced.

Dollar Steady as Oil Shock Rattles Global Markets

Brent crude climbed above $110 a barrel after fresh Middle East tensions disrupted sentiment and intensified inflation worries. The dollar index held near 99.325, while the euro traded at $1.1621 and sterling hovered at $1.3320.

Bond Rout Drives Fed Rate Expectations Higher

U.S. Treasury yields surged, with the 10-year yield reaching 4.6310%, sharpening expectations that the Federal Reserve could raise rates before year-end. Markets now price more than a 50% chance of another hike by December, while the yen weakened to 158.97 per dollar, keeping intervention speculation alive.