Dollar Drops as US-Iran Talks Revive Risk-On Mood

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.

What Would Confirm or Weaken the Dollar Breakdown

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.