
The dollar fell across the board on US-Iran talks optimism, touching a 10-day low. The USD Index remains in a $98.79-$99.45 congestion zone. A break below $98.50 is needed to confirm a bearish shift.
The USD Index fell across the board at the start of the week, pressured by renewed risk sentiment as expectations of a US–Iran agreement to reopen the Strait of Hormuz grew. The dollar opened with a gap lower and touched a 10-day low, reversing a portion of the safe-haven gains accumulated during earlier geopolitical uncertainty.
Renewed hopes that negotiations could avert a deeper supply crisis reduced demand for the dollar as a reserve asset. The move reflected a rotation into riskier currencies and assets, typical when headline risk shifts from confrontation toward diplomacy. For traders tracking the forex market analysis desk, the catalyst is clear: a softer geopolitical tone pressures the dollar. The follow-through depends on whether the talks deliver a tangible outcome.
The currency market repriced on Monday after reports suggested progress in indirect US–Iran talks. The prospect of reopening the Strait of Hormuz and easing supply chain fears lifted risk appetite and weighed on the dollar. The EUR/USD profile moved higher, and commodity-linked currencies saw demand as crude oil prices eased on the deal hopes.
The shift in sentiment carries a caveat. President Donald Trump has repeatedly changed the narrative around the peace process. The same pattern that built optimism earlier can reverse quickly if talks stall or a new threat emerges. This creates a two-way risk for the dollar: sustained progress keeps the dollar under pressure, while a breakdown in negotiations could drive a sharp safe-haven bid.
Despite the intraday weakness, the USD Index remains inside a well-defined congestion range of $98.79 to $99.45. The daily Tenkan-sen line at $98.80 and the top of the thinning daily cloud provided support during Monday’s session, limiting further downside. The price failure to break decisively below those levels suggests the move is still a correction rather than a trend reversal.
Daily studies remain bullish overall. Momentum indicators are heading south but are still in positive territory, a configuration that often accompanies a pause or shallow retracement before the broader uptrend resumes. The daily cloud base is near $98.50, and the Kijun-sen and the 50% retracement of the $97.44 to $99.48 upleg converge around $98.50. A breakdown below that zone would be required to confirm a bearish shift in structure.
Liquidity conditions complicate the picture. US markets were closed for a holiday on Monday, which reduces participation and can exaggerate moves or keep ranges narrow. The true test of the dollar’s direction will come when full volumes return.
A clear hourly close below $98.82 – the floor of the recent congestion – would generate an initial bearish signal. Confirmation would require a sustained extension below the pivotal $98.50 zone, which includes the daily Kijun-sen, the 50% retracement of the $97.44–$99.48 upleg, and the daily cloud base. Until that level is breached, the path of least resistance skews toward consolidation or a limited dip followed by renewed buying.
A failure to break lower would support the notion that the dollar’s underlying bullish trend remains intact. The next catalyst is likely to come from President Trump’s public comments on the Iran talks. Any hint of a setback could reverse Monday’s move and push the dollar back toward the top of the range at $99.45 and higher. Traders should watch for the Trump's Iran Deal Comment Reshapes Dollar, Oil Outlook pattern to repeat.
Resistance levels: $99.04, $99.45, $99.75, $100.00, $100.26. Support: $98.80, $98.50, $98.21, $97.92.
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