The US Dollar Index (DXY), which measures the value of the US dollar against a basket of currencies, experienced heavy selling and dropped to a nearly one-month low during the Asian session, trading around the 98.80 region and down 0.80% for the day [1]. This decline was triggered by US President Donald Trump's announcement to suspend planned military strikes against Iran for two weeks, which led to a risk-on rally across global financial markets and weakened the safe-haven appeal of the US dollar [1]. Additionally, the reopening of the Strait of Hormuz resulted in an intraday slump of over 10% in crude oil prices, easing inflationary fears and reducing expectations for a US Federal Reserve rate hike, further pressuring the dollar [1].
Technical analysis indicates that the DXY broke below the 23.6% Fibonacci retracement level of the January-March move up and subsequently fell below the 200-period Exponential Moving Average (EMA) on the 4-hour chart, signaling a bearish outlook [1]. The Moving Average Convergence Divergence (MACD) line slipped below its signal line just under the zero mark, with expanding negative histogram bars, suggesting building downside momentum [1]. The Relative Strength Index (RSI) is in the mid-20s, indicating oversold conditions but still pointing lower, which signals strong selling pressure despite the risk of a corrective bounce [1]. Immediate support is seen at the 38.2% Fibonacci retracement level at 98.72, and a clear break below this area could open the way toward the 50.0% retracement at 98.13 [1].
On the upside, initial resistance is at the 23.6% retracement at 99.46, with the 200-period EMA near 99.30 reinforcing that barrier. A recovery above 99.46 would ease immediate bearish pressure and expose the 100.00 handle, while failure to reclaim the moving average keeps sellers in control toward deeper Fibonacci supports [1].
CONCLUSION
The US Dollar Index has come under significant pressure following the US-Iran ceasefire news and the reopening of the Strait of Hormuz, which triggered a risk-on rally and a sharp drop in crude oil prices. Technical indicators suggest continued downside momentum for the dollar, with key support levels in focus. Market sentiment remains negative for the US dollar in the near term, as risk appetite and easing inflationary fears undermine its safe-haven status.