Oil surges, dollar flexes: Euro slips as markets brace for Trump

Oil prices climbed on Monday, pushing the U.S. dollar to hold near an 18-month high while the euro weakened, as investors weighed the impact of rising energy costs and political uncertainty in Europe. The dollar index, which measures the greenback against a basket of major currencies, hovered just below its strongest level since mid-2023. The euro fell against the dollar, pressured by concerns over the eurozone's economic outlook. Oil's rally added to the dollar's appeal. Higher crude prices often drive demand for the U.S. currency, which is used to settle global oil trades. Traders are also watching for signals from the incoming Trump administration on tariffs and trade policy. Proposed import taxes could fuel inflation, potentially keeping U.S. interest rates higher for longer — a scenario that typically strengthens the dollar. The euro's decline reflects a widening gap between the U.S. and European economies. While the U.S. shows resilient growth, the eurozone faces sluggish expansion and political instability in key member states. Markets remain on edge. A stronger dollar makes U.S. exports more expensive abroad and can strain emerging economies burdened by dollar-denominated debt.