Dollar and VIX, correlation has turned positive
The war in Iran has pushed the dollar back into doing what is typically expected of it during crises: rising. Many analysts have highlighted this in recent days, noting how the correlation between the dollar and the VIX — the implied volatility index of the S&P 500 — has turned positive again since the start of the conflict in the Middle East, returning to levels last seen in 2024.
According to Edoardo Campanella of UniCredit, during the conflict the dollar was “significantly” more correlated with equity volatility than with oil prices: when global risk aversion rises sharply, investors return to the most liquid currency in the system. An almost gravitational law of international finance, seemingly back in force.
The key point is that word “back,” because this relationship had been suspended for nearly a full year.
Trump’s universal tariffs had flipped the relationship: for much of 2025, whenever U.S.
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Photo by Michael Kauer
