The US Dollar Index (DXY) fell for a second day on Monday, moving away from the one-week high near 99.00 hit last Thursday. It stayed below the mid-98.00s in early European trade, with US-Iran peace talk hopes in focus.<\/p>\n
Reports said Iran sent the US a proposal to reopen the Strait of Hormuz and end the war, while nuclear talks were delayed to a later stage. Lower crude oil prices also eased inflation concerns and reduced hawkish Federal Reserve expectations.<\/p>\n
The chart outlook remains bearish after DXY failed to clear the 200-period EMA resistance on the 4-hour chart. It also dropped below the 38.2% Fibonacci retracement of the rebound from an April low near a two-month trough.<\/p>\n
MACD has moved into negative territory, while RSI sits near 45. Resistance levels are 98.44 (38.2% retracement) and 98.63 (23.6%), then 98.84 (200-period EMA) and 98.94.<\/p>\n
Support sits at 98.29 (50.0% retracement) and 98.13 (61.8%), followed by 97.91 (78.6%) and 97.64 (April swing low). The analysis states it was produced with support from an AI tool.<\/p>\n
Looking back at the analysis from last year, we saw a bearish outlook for the US Dollar Index below the 98.50 level. Today, with the DXY holding strong around 105.20, that perspective serves as a key reminder of how quickly fundamentals can shift. The bearish breakdown we anticipated in 2025 never fully materialized, forcing a re-evaluation of our underlying assumptions.<\/p>\n
We also saw expectations for a less aggressive Fed back in 2025, but the reality has been quite different. Persistently strong core inflation, which printed at 3.6% in the last report, has forced the Fed to maintain a higher-for-longer interest rate stance. This has kept US Treasury yields elevated and attracted capital inflows, directly supporting the Greenback.<\/p>\n
For derivative traders in the coming weeks, this means the bearish sentiment from last year should be completely reconsidered. We should be looking at strategies that benefit from continued dollar strength, such as buying call options on the Invesco DB US Dollar Index Bullish Fund (UUP). Hedging against any potential downside using put spreads offers a more cautious approach.<\/p>\n
The pivot from last year’s bearish technical setup to today’s bullish trend has kept currency volatility in play. The CME Group Volatility Index (CVOL) for the Euro\/USD pair, a major DXY component, is currently hovering around 9.8, indicating continued uncertainty. Selling out-of-the-money puts on the DXY could be a viable strategy to collect premium while expressing a view that the dollar will not fall significantly.<\/p>\n
The focus now shifts to the upcoming Federal Open Market Committee meeting in two weeks’ time. Any language suggesting a pause or a pivot would challenge the current dollar strength and unwind many of these positions. Until then, the path of least resistance appears to be a strong or range-bound dollar.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US Dollar Index slips below mid-98s on US-Iran peace hopes; bearish technicals, key Fibonacci levels watched.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45948","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45948","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45948"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45948\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}