Finance
Money markets show foreign demand for dollars at strongest since April 2025
Published by Global Banking & Finance Review®
Posted on March 10, 2026
1 min readLast updated: March 10, 2026
Quick Summary
Money markets are signaling heightened foreign demand for the U.S. dollar, with three-month euro–dollar basis swaps plunging to their lowest since April 2025 amid geopolitical shocks and energy-market volatility tied to the U.S.–Israel attack on Iran.
Money Markets Highlight Strongest Foreign Dollar Demand Since April 2025
Surge in Dollar Demand Amid Market Volatility
Market Strain Evident in Cross-Currency Basis Swaps
LONDON, March 10 (Reuters) - Money markets started to show signs of strain from this week's extreme volatility on Tuesday, pushing one measure of investor demand for dollars to its strongest since last April's "Liberation Day" turmoil.
Euro-Dollar Swap Movements
Three-month cross-currency basis swaps for the euro, a derivative that reflects demand for dollars, hit their lowest since last April, at 0.625%, from around 6.4% late on Monday, according to LSEG data. The lower the number, the greater the demand among investors to hold dollars rather than euros.
Historical Context: April 2025 Turmoil
This rate plunged to a low of -6.625% on April 7..
Currency Volatility and Geopolitical Factors
Euro Performance Against the Dollar
The euro itself has lost around 1.5% against the dollar since the U.S. and Israel-led attack on Iran on February 28. Even though volatility has surged across the broader markets, given the dramatic spike in the cost of oil and natural gas, currency volatility has remained relatively contained so far.
(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)
Key Takeaways
- •The three-month euro cross-currency basis swap dropped sharply to around 0.625%, the weakest since April 2025, indicating intense demand among investors to hold dollars over euros. cite turn0search0
- •The drop recalls the April 2025 “Liberation Day” episode—a period marked by dollar-backed stress and a basis swap trough near –6.625%—underlining that current demand is the strongest since that disruption. cite turn0search6
- •The dollar’s strength has been reinforced by geopolitical tensions, including U.S.–Israeli military strikes on Iran on February 28, which spiked oil prices and added pressure to safe-haven flows; Brent crude surged more than 8–9%, intensifying dollar demand. cite turn0news12 cite turn0search5
Frequently Asked Questions about Money markets show foreign demand for dollars at strongest since April 2025
1What signaled increased foreign demand for dollars in the money markets?
The three-month cross-currency basis swaps for the euro reflected the highest demand for dollars since April 2025, reaching their lowest level.
2How has the euro performed against the dollar recently?
The euro has lost around 1.5% against the dollar since the U.S. and Israel-led attack on Iran on February 28.
3What impact did market volatility have on currency movements?
While overall market volatility surged due to rising oil and gas prices, currency volatility, particularly for the euro and dollar, remained relatively contained.
4What historical comparison is made in the article?
The current dollar demand is compared to levels last seen during the 'Liberation Day' turmoil in April 2025.