Dollar and VIX Back in Tandem as Iran War Usurps Tariff Bets

The dollar’s traditional relationship with equity market volatility has been revived by the war in Iran, a signal that haven-seeking investors are finding safety in the US assets they snubbed after last year’s tariff turmoil.

The greenback’s correlation to the CBOE Volatility Index has turned increasingly positive since the start of the war and is now at levels last seen in 2024. That marks a return to the trend seen for much of the past five years, with the dollar rallying in periods of volatility and falling when equity markets are calmer.