US Dollar Index hovers around 99.00, looks at geopolitics

The US Dollar (USD) kicks off the new trading week on the back foot as investors continue to assess news that a potential US-Iran deal could be clinched anytime soon.

Geopolitics remain centre stage

Against that backdrop, the US Dollar Index (DXY) reverses two consecutive daily advances and refocuses on the downside, breaching below the 99.00 support to hit new multi-day troughs.

The generalised improvement in the risk-linked universe comes in response to steady rumours that the US and Iran could clinch an agreement that would allow reopening the vital Strait of Hormuz.

In the meantime, these prospects continue to push crude Oil prices lower, alleviating inflation concerns and, by the same token, the idea that the Federal Reserve (Fed) might keep its cautious stance for longer than initially anticipated.

Meanwhile, there is no activity in the US markets in observance of the Memorial Day holiday on Monday. Next on tap for the US doclet will be the always-relevant Consumer Confidence tracked by the Conference Board, seconded by housing data, all scheduled for Tuesday.

Key levels to watch

So far, the DXY is trading with modest losses near the 99.00 yardstick. The resurgence of the upside momentum could challenge the May top at 99.51 (May 21), seconded by the 2026 ceiling at 100.64 (March 31).

On the flip side, bears continue to target the critical 200-day SMA at 98.56 prior to the May valley at 97.62 (May 6). Once this area is cleared, the index could embark on a probable visit to the February floor at 96.49 (February 11), all preceding the 2026 bottom at 95.55 (January 27).

Finally, the daily Relative Strength Index (RSI) remains close to the 53 mark, while the Average Directional Index (ADX) around 18 suggests a still colourless trend.