US Dollar Index (DXY) Price Forecast: Bounces off 50% Fibo. on Iran tensions, hawkish Fed

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, regains some positive traction on Friday and reverses a part of the previous day's sharp retracement slide from a three-week high – level just above the 99.00 mark. The index sticks to modest intraday gains heading into the European session and currently trade around the 98.25 region, up over 0.10% for the day.

Against the backdrop of stalled US-Iran peace talks, US President Donald Trump said that he's going to keep Iran under a naval blockade until the regime agrees to a deal that addresses concerns about its nuclear program. Furthermore, reports suggest that the US is considering new military strikes on Iran, fueling worries about a further escalation of tensions between the US and Iran. This, along with the US Federal Reserve's (Fed) hawkish tilt, turns out to be another factor underpinning the safe-haven US Dollar (USD).

From a technical perspective, the previous day's rejection slide from the very important 200-day Simple Moving Average (SMA) stalled near the 50% Fibonacci retracement level of the January-March upswing. The said support is pegged at 98.06, which, if broken, will be seen as a key trigger for the USD bears and pave the way for deeper losses. The subsequent could extend to the 61.8% level at 97.48 if sellers extend control.

Meanwhile, the Relative Strength Index (RSI) is near 43, and a slightly negative Moving Average Convergence Divergence (MACD) histogram hints that downside pressure remains in place, albeit without clear oversold conditions. Hence, the index is likely to be capped by the 38.2% retracement at 98.65. Furthermore, bulls would need to reclaim the 200-day EMA at 99.06 and then the 23.6% retracement at 99.38 to challenge the prevailing bearish structure.

(The technical analysis of this story was written with the help of an AI tool.)

DXY daily chart