The US Dollar Index (DXY) traded marginally higher above 98.00 in the European morning on Tuesday, following slight losses on Monday, as investors awaited further developments in US-Iran relations and the upcoming testimony of Kevin Warsh, President Trump's nominee for Federal Reserve Chair [1][2]. President Trump stated that an extension to the US-Iran ceasefire, set to expire on Wednesday, was 'highly unlikely.' While reports indicated the possibility of a second round of talks before the deadline, Iran's chief negotiator and parliament speaker, Mohammed Bagher Ghalibaf, asserted that Iran would not negotiate 'under the shadow of threats' and hinted at revealing 'new cards on the battlefield' [1]. US news outlets reported that Vice President JD Vance would travel to Pakistan on Tuesday, but Iran had not confirmed sending a delegation [1].
On the technical front, the DXY remained within a descending channel pattern, indicating a bearish bias, as it traded around 98.10 during early European hours [2]. The index stayed below both the nine-day and 50-day Exponential Moving Averages (EMAs), with the 14-day Relative Strength Index (RSI) near 40, reinforcing a weak tone and suggesting sellers retain control after the recent pullback [2]. The primary resistance is at the nine-day EMA at 98.41, with further resistance at the upper boundary of the channel around 98.70 and the 50-day EMA at 98.83. A break above these levels could shift the bias bullish, targeting the 10-month high of 100.64 recorded on March 31 [2]. Conversely, a sustained break below the channel could push the index toward 97.20 or even 95.56, the lowest since February 2022 [2].
Currency performance data showed the US Dollar was strongest against the Australian Dollar, with a 0.25% gain according to one source [1], and 0.20% according to another [2]. The DXY also posted gains against the Euro, British Pound, Japanese Yen, Canadian Dollar, New Zealand Dollar, and Swiss Franc, though the exact percentages varied slightly between sources [1][2]. US stock index futures traded flat after Wall Street's main indexes closed in the red on Monday [1].
In the UK, the Office for National Statistics reported that the ILO Unemployment Rate declined to 4.9% in the three months to February, better than the expected 5.2%. However, GBP/USD traded marginally lower near 1.3520, largely ignoring the report [1]. The market awaited the release of US Retail Sales data for March and the UK's Consumer Price Index data for March, both scheduled for later in the week [1].
CONCLUSION
The US Dollar Index is trading with a bearish technical bias despite holding modest gains amid geopolitical uncertainty and anticipation of key economic data. Market sentiment remains cautious, with investors closely monitoring US-Iran developments and upcoming central bank testimony. The DXY's near-term direction will likely depend on the outcome of these events and technical levels.