Dollar holds mild losses ahead of Trump's Iran deadline

The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, was trading marginally softer Tuesday morning as traders remained cautious ahead of the looming U.S. deadline for Iran to reopen the Strait of Hormuz. US President Trump has set 8 p.m. ET on Tuesday as the final deadline for Iran to reopen the Strait of Hormuz. He has threatened to launch huge strikes on Iranian infrastructure if Tehran does not comply.

On Monday, the US dollar edged lower as investors weighed reports of a potential ceasefire in the Middle East. However, Iran rejected the 45-day ceasefire proposal and refused to reopen the Strait of Hormuz for a temporary truce. The dollar’s retreat extended following the release of weaker-than-expected US ISM services PMI data, which fell to 54 in March compared to forecasts of 55, signaling a slowdown in services activity.

USD: Looking for clear direction

Technically, price action appears to be consolidating. As the North American session progresses, USD traders will focus on February’s US durable goods orders data, scheduled for release at 12:30 GMT. However, the dollar is likely to trade sideways ahead of President Trump’s midnight Tuesday deadline, which may trigger increased volatility.

Dollar Index Technical Outlook

Despite the recent pullback, the uptrend remains intact as long as the DXY trades above the 99.00/98.80 support zone. Currently, the index trades below 99.70 but needs to break and close above the 100/100.30 resistance level for further upside momentum. If the index manages to settle above 100.30, it will head towards the next resistance level of 100.80.

On the downside, immediate support lies at 99.60, followed by 99.30/99.10. Bears will look for a confirmed break below the critical 99.00/98.80 support to trigger a strong bearish move. A breach of 98.80 would invalidate the bullish trend and could lead to a sharp sell-off toward 98.30/98.00.

 

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