The U.S. dollar is currently navigating a period of sharp volatility as it attempts to reverse a long-standing downtrend. While the currency hit five-year lows in January near 95.50, the Greenback has staged a meaningful recovery in February. The U.S. Dollar Index (DXY) is now trading near the 97.89 mark, its strongest weekly performance in four months. This rebound is driven by the nomination of a potentially more hawkish Federal Reserve Chair and a series of resilient economic data points. Economic fundamentals remain a primary pillar of support. Real GDP for 2026 is forecast to expand between 2.3% and 2.4%, reflecting a solid growth trajectory. Additionally, the labor market continues to show strength, with unemployment holding steady at 4.4%. Geopolitical factors are also playing a critical role in the dollar's safe-haven appeal. Tensions between the U.S. and Iran have intensified, leading to a 6% surge in oil prices recently, with Brent crude trading around $71.77. These risks, combined with shifts in trade policy following recent Supreme Court rulings on tariffs, have kept investors cautious. The Indian Rupee is facing significant downward pressure amidst this global shift. The USD/INR exchange rate has climbed to approximately 90.95, a sharp move from levels near 83.77 seen last year. Domestic factors in India are adding to the rupee's challenges. While manufacturing activity is strong—with the PMI rising to 57.5 in February—a selling rush in local equities and rising crude oil prices have weighed on the currency. The Reserve Bank of India has been active in the 90.70 to 90.80 zone to prevent even steeper depreciation. Looking ahead, the market is focused on whether the Dollar Index can sustain its position above the 97 level. If technical momentum continues, analysts see the index testing resistance at 98.80 or moving further toward the 100 to 102 range. For the rupee, the combination of a stronger dollar and high energy costs suggests a testing period. Markets are closely watching upcoming U.S. inflation data and the Federal Reserve's January meeting minutes to gauge if this dollar recovery has the stamina to reach new yearly highs.