US Dollar (DXY) Tests Key Resistance on Middle East Energy Risks

Author: Razan Hilal, CMT

Date: April 3, 2026

Summary

The article discusses the recent fluctuations in the US Dollar Index (DXY) as it approaches a critical resistance level of 99.50, influenced by escalating tensions in the Middle East. The closure of the Strait of Hormuz and targeted strikes on oil and gas facilities have heightened global energy concerns and inflation expectations, thereby supporting the dollar's strength.

Key Events

• DXY retests the 99.50 resistance, a pivotal point for a potential bullish trend.
• Supply disruptions in the Middle East, particularly in Qatar, Saudi Arabia, Iraq, and Iran, have led to increased global energy prices and inflation worries.
• Major currency pairs like EUR/USD and GBP/USD are under pressure, with EUR/USD attempting to hold above 1.16 and GBP/USD above 1.33.

Market Reactions

The article notes that the market took a few days to react to the Middle East tensions. Although the closure of the Strait of Hormuz was initially expected to be temporary, the ongoing regional conflicts have sustained energy price increases. Brent crude oil prices have surged into the $80 range, while WTI has risen above $70, contributing to inflationary pressures and affecting global equity markets.

Impact on Indices

Global equity indices, particularly those in energy-dependent economies, have experienced significant declines. The Nikkei, DAX, and Kospi have seen steep drops, while US indices have remained relatively stable but still exhibit bearish trends.

Technical Analysis

The DXY's price action has returned to a key resistance zone that has been significant since February 2023. The article outlines potential scenarios:

• A breakout above 99.50 could lead to further gains towards 102 and 105.
• Failure to maintain above 99.50 may result in consolidation between 98 and 96.50, with a break below 96.50 opening the path to 2021 lows near 92 and 89.

EUR/USD Outlook

For the EUR/USD pair, the article highlights that it is attempting to hold above the 2026 lows near 1.1580. A close below this level could expose further downside risks towards 1.1480 and potentially 1.13, aligning with the upper boundary of its long-term channel.

Conclusion

The article emphasizes the importance of monitoring the evolving geopolitical situation in the Middle East and its implications for energy prices, inflation, and currency markets. As central banks adjust their policies in response to these developments, traders should remain vigilant regarding potential market shifts.