Dollar Higher As Trump Threatens Iran
US/Iran Tensions Rise Again
The US Dollar is starting the week with an upbeat tone as traders eye incoming headlines around US/Iran peace talks (specifically pertaining to the Strait of Hormuz) and Fedspeak across the week. On the US/Iran front, news that Iran has shut down the Strait of Hormuz once again, with Trump threatening fresh strikes on Iran, is keeping USD safe-haven demand intact for now. Despite the signing of the interim peace deal on Friday, tensions remain elevated amidst fresh Israel-Hezbollah fighting with risks now leaning towards fresh military action between the US and Iran. If we do hear news of renewed attacks this should see USD pushing higher again near-term as safe-haven demand grows.
Fed Members to Speak
On the Fed front, traders will be keen to hear from a slew of Fed speakers across the week following the FOMC meeting last week which showed a clear hawkish shift among policymakers. Nine out of eighteen policymakers forecasted at least one hike this year with five projecting at least two hikes. As such, USD risks are pointed higher this week with the likelihood that we hear some clarity around these projections to help underpin bullish USD sentiment near-term. We also have the latest core PCE data due later in the week which should also feed into USD buying if inflationary pressures are seen remaining strong in that data set.
Technical Views
DXY
The rally in the index has seen price breaking out above the 100.18 level and above the prior 2026 highs. While above this level and with momentum studies bullish, focus is on a continuation higher with 101.91 the next target for bulls and the bull channel highs just above.
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