Dollar Rebounds as Markets Eye Energy-Driven Inflation Risks

The US Dollar Index (DXY) recorded an increase of about 0.2% at the start of the New York trading session on Wednesday, March 11. The latest inflation data from the United States was in line with market expectations, but the recent surge in crude oil prices has raised concerns that inflationary pressures may rise again in the near future.

Data released by the U.S. Department of Labor showed that consumer inflation in February 2026 moved largely in line with market expectations. The Consumer Price Index (CPI) overall rose by 0.3% month-on-month and 2.4% year-on-year. Meanwhile, core inflation—which excludes energy and food components—increased 0.2% on a monthly basis and 2.5% compared with the same period last year.

However, several economists noted that the data may not yet fully reflect the impact of higher fuel prices following the outbreak of conflict involving Iran late last month. With inflation still above the central bank's target, a continued rise in energy costs could add to price pressures and potentially reduce the likelihood of Fed rate cuts.

The Chief Economist of Annex Wealth Management, Brian Jacobsen, assessed that the inflation trend had actually shown improvement before the geopolitical situation in the Middle East reignited price pressures. He stated that the energy sector, which was previously expected to have a deflationary effect, now has the potential to become a new source of inflation. He also warned that food prices could face upward pressure due to disruptions in the global fertilizer market.

This concern is not unrelated to the fact that fossil fuels are a key input in the production of many modern fertilizers, particularly nitrogen-based varieties. Recent analysis by the UN Conference on Trade and Development (UNCTAD) also highlights the importance of the Strait of Hormuz in global fertilizer trade. Roughly one-third of the world's seaborne fertilizer shipments pass through the waterway, meaning disruptions in the region could threaten supply, particularly for developing economies.

Amid rising tensions and the risk of an energy crisis, the International Energy Agency (IEA) plans to recommend the release of up to around 400 million barrels from global oil reserves. Some countries, such as Japan and Germany, have expressed readiness to begin releasing part of their strategic reserves. However, there is still no certainty regarding similar actions from the United States.