Insights 
VT 
Key Points
- USDX consolidates near 98.9 following Powell’s remarks and revised Fed rate outlook
- Dollar supported by safe-haven flows as Iran warns US against military action
The US Dollar Index (USDX) held firm near 98.9 on Thursday, stabilising after a volatile week driven by central bank signals and growing geopolitical risks. The index closed at 98.641 after reaching a session high of 98.671, holding above its key resistance zone and consolidating gains made earlier in the week.
This dollar strength comes in the wake of the US Federal Reserve’s latest policy decision, where the central bank opted to keep rates unchanged but delivered a more dovish forecast than markets had anticipated.
Chair Jerome Powell signalled a potentially inflationary outlook driven by President Trump’s tariff policies and trade disruptions, warning that price pressures could resurface in the coming months.
Surprisingly, the Fed also adjusted its 2025 forecast to include two rate cuts of 25 basis points each—up from the one previously expected by most traders. This shift has recalibrated expectations across Treasury markets and forex desks, leading to fresh inflows into the greenback.
Further bolstering the dollar is its safe-haven status amid deteriorating global risk sentiment. The Israel-Iran conflict, now in its second week, has reintroduced war premium pricing across asset classes. US officials have yet to confirm involvement, but sources suggest contingency plans are being drafted in case of escalation.
Iran’s Supreme Leader Ayatollah Ali Khamenei issued a sharp warning to the US, declaring that any military intervention would result in “irreparable damage.” This rhetoric has increased trader demand for defensive assets, including the dollar.
Technical Analysis
The US Dollar Index (USDX) is showing a firm bullish continuation pattern on the 15-minute timeframe. After forming a solid base around 97.529, the index initiated a strong uptrend, creating higher lows and higher highs. Price has now climbed steadily to 98.641, nearing key resistance around the 98.67–98.70 zone.
Picture: Consolidation breakout pushes USDX toward fresh highs, as seen on the VT Markets app
The moving averages (5, 10, 30) are aligned in bullish formation, with the shorter-term averages consistently leading above the longer-term 30-period MA, reinforcing the current uptrend. The MACD also supports this momentum: the histogram is expanding positively, and the MACD line remains above the signal line, suggesting strong underlying bullish sentiment.
Price action shows brief consolidation between 98.20–98.40, forming a flag pattern that resolved to the upside. The breakout is now testing fresh highs with minimal retracement—indicating buyers are in control
With both monetary policy uncertainty and geopolitical risk at the forefront, the US dollar may continue to benefit from risk-off flows in the near term. However, if inflation does rise while the Fed remains committed to rate cuts, the greenback could soon face a crosscurrent of conflicting macro forces. For now, the bullish bias remains intact as long as USDX holds above the 98.4 level.
