Oil is rising. Bonds are falling. Stocks are nervous. The dollar calmly collects tribute from the general panic.

Brent jumped above $105/barrel after a report cast doubt on the idea that Donald Trump would avoid escalating the conflict with Iran before the US midterms. 10-year Treasury yields rose, and the move even touched Europe. German bunds weakened, and EUR/USD continued to retreat.

The greenback is supported by comments from Fed governor Christopher Waller, who allowed for further rate increases. "If data continue to come in as expected, I expect additional steps to speed the return of inflation to the 2% target." Hikes do not have to happen at every meeting, he added, but they should occur within a reasonable timeframe.

French sovereign and corporate bonds

A negative factor for EUR/USD remains the political deadlock in France, which is hindering efforts to rein in the budget deficit. According to Bloomberg, after the punitive sell-off of sovereign debt, local corporate bonds totaling about €215bn are trading as if they are safer than government bonds. That amount has grown almost eighteenfold since early 2026 — like a snowball rolling with no one to stop it.

The ECB's problems are mounting. Inflation is approaching 4%, fuelling expectations of another deposit-rate hike. Investors are dumping French and other over-leveraged euro-area bonds, reviving memories of the debt crisis a decade ago — an old wound that has not fully healed. Chief economist Philip Lane reiterated that a "moderate" response to the energy shock from a potential Iranian war is appropriate because the effect on the wider economy is limited.

Dollar dynamics

The minutes of the September Fed meeting showed that another federal-funds rate hike is likely by year-end, as the regulator does not intend to stop. XTB believes the dollar is acting as a countercyclical asset: it attracts flows into a safe haven while other asset classes are being sold off.

Nearly all G10 currencies are weakening against the greenback. The euro lags peers as rising energy prices and France's fiscal troubles press the single currency from both sides. Last month, the Federal Reserve raised rates for the first time in three years, and since then several officials have said more needs to be done to rein in inflation. Markets expect further Fed moves into next autumn. Rabobank thinks that as long as the US growth story holds and Fed rates point up, the dollar will find buyers. Only the brave will load up on EUR/USD now.

If I were considering a bet against the greenback, I would not rush it.

Technically, on the daily chart, EUR/USD's inside bar formation allows placing pending buy orders from 1.121 and sell orders from 1.117.