The US Dollar Index (DXY) rallied for the third consecutive day, rising about 0.30% on Thursday and trading close to 99.90, as heightened safe-haven demand drove the Greenback higher amid escalating tensions between the US and Iran [1][2]. The DXY has recovered more than three points from its February low near 96.00, approaching the psychological 100.00 level for the first time since mid-March [1]. The surge was underpinned by Iran's formal rejection of Washington's 15-point ceasefire proposal, which intensified risk-off sentiment. Tehran countered with five demands, including war reparations and recognition of Iranian sovereignty over the Strait of Hormuz, which remains closed to Western-allied vessels. Shipping analysts see little chance of routine commercial transit resuming before year-end [1].
Asian economies responded to the energy crisis by releasing oil reserves and declaring emergencies: Japan began releasing 30 days of state oil reserves, while the Philippines declared a national emergency over energy supply [1]. President Trump commented that the recent increase in oil prices and the drop in the stock market amid Iran tensions were not as severe as expected, expressing confidence that any economic damage would eventually be reversed [2]. He also suggested that taking over Iran's crude oil supply remains "an option" [1].
The Federal Reserve held the federal funds rate at 3.50% to 3.75% during its March meeting, with the dot plot signaling one cut this year. Chair Jerome Powell described the conflict as "an energy shock of some size and duration" but noted it was too soon to judge the full impact on the US economy. Fed Governor Michael Barr echoed a cautious tone, indicating rates may need to stay elevated to address inflation. Markets have largely priced out near-term rate cuts, reinforcing the Dollar's yield advantage over the Euro and Yen [1].
The US Dollar was the strongest against the Australian Dollar, gaining 0.83%, and also posted gains against the Euro (0.23%), British Pound (0.30%), Japanese Yen (0.18%), Canadian Dollar (0.27%), New Zealand Dollar (0.80%), and Swiss Franc (0.40%) [2]. EUR/USD slipped toward 1.1530, GBP/USD fell to 1.3320, USD/JPY rose to 159.80, and AUD/USD moved lower toward 0.6890, reflecting broad USD strength and risk aversion [2]. West Texas Intermediate (WTI) Oil traded near $94.30 per barrel, holding firm as Iran-related uncertainty maintained a geopolitical risk premium [2].
Technical analysis shows the DXY trading at 99.92 on the 5-minute chart, with a mildly bullish bias as price holds above the rising 200-period EMA around 99.76. Initial support is at 99.90, with resistance at 99.96 and the psychological 100.00 level [1].
CONCLUSION
The US Dollar Index's sustained rally reflects robust safe-haven demand amid escalating US-Iran tensions and energy supply concerns. With the Federal Reserve maintaining a cautious stance and markets pricing out near-term rate cuts, the Dollar's yield advantage remains intact. Broad USD strength and elevated oil prices signal continued market caution and high geopolitical risk.