The US Dollar Index (DXY) slipped to about 99.10 after failing to hold above 99.35. It moved lower as markets reacted to rising expectations of a US-Iran deal.<\/p>\n
President Donald Trump said the US is in the \u201cfinal stages\u201d of reaching an agreement with Iran. Oil prices fell during Wednesday\u2019s correction, which fed through to US rates.<\/p>\n
The 10-year US Treasury yield gave up earlier gains and was flat near 4.58%. Yields had risen over the past two weeks as traders priced in no Federal Reserve rate cuts this year, linked to higher oil prices.<\/p>\n
Markets are waiting for the preliminary US S&P Global PMI data for May, due at 13:45 GMT. The report may affect short-term moves in the dollar and yields.<\/p>\n
In technical terms, DXY remains above the 20-day EMA at 98.75. The RSI is 57.62, suggesting upward momentum without being overbought.<\/p>\n
Support is seen at 98.75, with a break pointing towards 98.00. Resistance includes 99.47, the May 20 high, and a move above it could open a test of 100.00.<\/p>\n
We are seeing a familiar pattern as the US Dollar Index reacts to geopolitical headlines, pulling back from recent highs. This is reminiscent of the volatility we tracked back in 2025, when optimism over a potential US-Iran deal caused the DXY to abruptly reverse from the 99.50 resistance level. Although the index is trading at a different level today, the underlying principle that geopolitical news can override technical trends remains a key lesson.<\/p>\n
This sudden increase in uncertainty means derivative traders should be prepared for bigger price swings in the coming weeks. The Cboe Volatility Index (VIX) has already climbed over 15% this past week to 14.8, reflecting growing market anxiety. This environment suggests that buying options, like straddles or strangles on major currency pairs, could be a prudent way to capitalize on rising volatility, regardless of the direction the dollar ultimately takes.<\/p>\n
The connection between the dollar and US Treasury yields is as important now as it was then. In the 2025 scenario, yields fell to around 4.58%, weighing on the dollar, and we see a similar dynamic as the 10-year yield has now dipped below 4.50% for the first time in three months. According to the CME FedWatch Tool, the market has consequently priced out the probability of another Federal Reserve rate hike this year, a significant shift from just two weeks ago.<\/p>\n
From a technical standpoint, the Dollar Index is currently testing crucial support near its 50-day moving average of 105.20. A firm break below this level could open the door for a deeper correction towards the 104.00 mark. Traders could look at buying put options or establishing bear put spreads to hedge against or profit from a potential downturn.<\/p>\n
We must also watch the relationship between the dollar and energy prices, which was a major factor in the 2025 reversal. With WTI crude oil prices having fallen 8% this month to around $75 per barrel, downward pressure on inflation expectations is increasing. Historically, periods of rapidly falling oil prices have often correlated with short-term dollar weakness, a factor that should be included in any trading models.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" DXY slips near 99.10 on US-Iran deal hopes; oil, yields ease; PMI awaited; supports\/resistance noted.<\/p>\n","protected":false},"author":103,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[9],"class_list":["post-53810","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-dollar"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=53810"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53810\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=53810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=53810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=53810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}