Here’s what’s driving the U.S. dollar to its strongest position in almost a month — and it’s not just Iran tensions

MarketWatch

by Vivien Lou Chen

February 19, 2026

AI-Generated Deep Dive Summary

The U.S. dollar is experiencing its strongest position in nearly a month, driven by multiple factors beyond just geopolitical tensions with Iran. Investors are attributing this rally to a combination of potential U.S. military action against Iran, robust economic data indicating unexpected strength in certain sectors, and the recent volatility in U.S. stock markets, which have enhanced the dollar's safe-haven appeal. The ICE U.S. Dollar Index (DXY) reached 98.07 on Thursday, its highest level since January 22, signaling a significant shift in currency dynamics. One key catalyst is the looming possibility of a U.S. military strike against Iran. This geopolitical uncertainty has traditionally led investors to seek safer assets, such as the dollar, as a hedge against risk. Economic data also played a role, with figures showing unexpected resilience in parts of the economy, reinforcing confidence in the U.S. financial system. Additionally, the recent turbulence in stock markets has further bolstered demand for美元as a haven asset. The rally highlights the interconnectedness of global financial markets and how geopolitical tensions can rapidly influence currency movements. For investors, this shift underscores the importance of monitoring multiple factors—geopolitical developments, economic data, and market sentiment—in understanding currency trends. The strengthening dollar could have broader implications, including for international trade and global monetary policies. This situation matters to finance readers as it reflects ongoing dynamics in global markets and the interplay between economics and geopolitics. The rally also underscores the role of safe-haven currencies during periods of uncertainty, offering insights into investor behavior and risk sentiment. For businesses and individuals with cross-border transactions, tracking these trends is crucial for informed financial decision-making. In summary, while tensions with Iran have contributed to the dollar's strength, other factors like economic data and market volatility are equally significant. This multifaceted rally underscores the complex interplay of elements that drive currency movements and highlights the importance of a comprehensive approach to understanding global financial dynamics.

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Originally published on MarketWatch on 2/19/2026