Dollar clings to modest gains despite renewed optimism for a US-Iran deal

The US Dollar Index (DXY), which measures the greenback’s value against a basket of weighted currencies, is experiencing a modest rebound after stabilizing below 98.00. On Monday, the dollar declined amid growing optimism that the US and Iran might reach an agreement before the ceasefire deadline. However, bulls found support near the 98.00 level, and ongoing uncertainty surrounding the US–Iran peace talks continues to underpin the recovery.

USD Attempts Rebound, but Momentum Shift Needs Confirmation

The past few days have been challenging for the dollar. Last week, the DXY dropped to a seven-week low near 97.70 as the Iran ceasefire triggered a broad unwind of haven positioning. Meanwhile, investors remain uncertain about the future direction of interest rates, which is expected to cause near-term volatility. Key factors to watch today include US retail sales data and geopolitical developments, alongside comments from Fed speakers.

DXY Technical Forecast

Technically, momentum has shifted from neutral to slightly bullish following the rebound. The immediate resistance lies at 98.40; a break above this could push the index toward the next resistance zone around 98.80 to 99.00, a key supply area this week that warrants close attention. On the downside, any meaningful pullback now seems to find nearest support near the 98.00 and 97.60 zones.

Bottom Line: Despite the rebound, the overall technical outlook remains bearish. Attempts to break out of the current bearish channel are unlikely to succeed without surpassing the 99.00 resistance level. Fundamentally, the dollar has gained amid mixed signals on US-Iran peace talks. However, if a ceasefire is extended this week, the dollar would fall more as investors return to developing markets and stocks.

 

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