US Dollar Price Forecast: DXY Tests $98.30 as Hormuz Blockade Returns

Key Points

• Hormuz Safe-Haven Bid: The DXY is testing $98.30 resistance as the re-closure of the Strait of Hormuz reignites defensive cash flows.
• Euro Channel Support: EUR/USD is holding its uptrend channel at $1.1770; the 50-day EMA at $1.1735 remains the critical "must-hold" floor.
• Pound Consolidation: GBP/USD is hovering at $1.3510, with buyers defending an ascending trendline despite $1.3600 resistance hurdles.

Market Overview

The US Dollar Index (DXY) started the week on a solid note, hovering around the 98.00-98.40 mark, influenced by renewed tensions between the US and Iran, which created a safe haven effect. Optimism from last week’s temporary reopening of the Strait of Hormuz quickly faded when news of its closure emerged, alongside the US seizing an Iranian ship and reports of maritime incidents. Stalemates in diplomatic talks added to the uncertainty, compounded by inflation fears driven by rising oil prices and a stronger dollar, leaving investors speculating about the Federal Reserve's next moves.

The Euro faced pressure from the geopolitical situation, trading between 1.1750-1.1770. Although it initially dropped, it managed to recover slightly during talks of de-escalation, only to be knocked back down by renewed tensions. The European Central Bank (ECB) remains cautious, as energy price spikes complicate their policy outlook.

The Pound followed a similar trajectory, trading between 1.3500-1.3540. While recent UK GDP and job numbers were surprisingly resilient, soaring energy costs raised stagflation concerns. The Bank of England (BoE) is adopting a cautious stance amid volatility in the dollar and oil prices.

DXY Outlook: Dollar Tests $98.30 Resistance Zone

The DXY is stabilizing around $98.16 after a significant drop, now approaching a key resistance zone at $98.30. It remains below both the 50-day and 200-day EMAs, indicating a bearish trend. A trendline is capping the upside, and recent candle patterns suggest weak bullish momentum. The RSI is recovering from oversold conditions but lacks strength. If the DXY is rejected below $98.30, it may drift back toward $97.60; a clean break above could push it toward $98.90.

GBP/USD Analysis: Pound Holds Trendline Support Near $1.3500

GBP/USD is around $1.3510, testing an ascending trendline support. The price remains above the 50-day EMA, suggesting a constructive structure despite resistance near $1.3600. The candles indicate uncertainty among traders. If the pound holds above $1.3480, it may push towards $1.3580; however, a breakdown below the trendline could lead to a pullback toward $1.3400.

EUR/USD Forecast: Uptrend Channel Faces Near-Term Pressure

EUR/USD is trading around $1.1770, slightly retreating within a defined uptrend channel. After being rejected from the upper boundary near $1.1850, bearish candles indicate short-term exhaustion. The outlook remains bullish as long as it holds above the channel's midpoint and the 50-day EMA at $1.1735. A bounce from current levels could target $1.1820, while a fall below $1.1730 may expose deeper support near $1.1660.