The US Dollar Index (DXY) began the new trading week under pressure, reversing two consecutive days of gains and breaching the 99.00 support level to reach new multi-day lows. This decline comes as investors react to ongoing rumors that a potential agreement between the US and Iran could be finalized soon, which may lead to the reopening of the Strait of Hormuz, a critical passage for global oil shipments [1].
The anticipation of a US-Iran deal has contributed to a generalized improvement in risk sentiment across markets and has pushed crude oil prices lower. This alleviation in oil prices is easing inflation concerns, which in turn reduces expectations that the Federal Reserve will maintain its cautious monetary policy stance for an extended period [1].
With US markets closed for Memorial Day, trading activity was subdued. Investors are now looking ahead to key economic data releases scheduled for Tuesday, including the Conference Board's Consumer Confidence report and housing data [1].
Technically, the DXY is experiencing modest losses near the 99.00 level. If upward momentum returns, the index could challenge the May high of 99.51 (May 21) and the 2026 ceiling at 100.64 (March 31). On the downside, bears are eyeing the 200-day simple moving average at 98.56, with further support at the May low of 97.62 (May 6) and the February floor at 96.49 (February 11). The daily Relative Strength Index (RSI) is near 53, while the Average Directional Index (ADX) at 18 indicates a lack of a strong trend [1].
CONCLUSION
The US Dollar Index is under pressure as speculation about a US-Iran deal and falling oil prices weigh on the currency. With key economic data on the horizon and technical indicators showing a lack of clear trend, market participants remain cautious about the DXY's near-term direction.