What Happened
The US Dollar Index (DXY) — which measures the US dollar against a basket of six major currencies — climbed for a second straight session, trading around 98.10 during Asian hours on Tuesday. The move was fuelled by fading optimism around US-Iran peace negotiations, pushing traders back toward the safe-haven greenback.
Key Levels
- Support 1: 97.50 — a recent consolidation zone that held through last week’s dip
- Support 2: 96.80 — the April swing low and a key structural floor
- Resistance 1: 98.50 — the immediate overhead barrier where sellers emerged last week
- Resistance 2: 99.20 — a stronger ceiling aligning with the 50-day moving average
Technical Picture
The DXY is attempting to reclaim its short-term trend after bouncing off the 96.80 support zone. The index is trading below its 50-day moving average (~99.20), keeping the broader trend bearish. However, two consecutive up days suggest short-term momentum is shifting. RSI is recovering from oversold territory toward the neutral 50 level, indicating room for further upside before the index becomes overbought.
What Traders Are Watching
The critical level to watch is 98.50. A clean daily close above this level would signal a stronger short-term recovery and likely add pressure to gold (XAU/USD) and iron ore prices. For ASX traders, a firmer USD typically weighs on resource stocks like BHP and RIO, as commodities priced in US dollars become more expensive globally. Conversely, Australian exporters with USD-denominated revenues could see a tailwind. If DXY fails at 98.50 and reverses, the next downside target returns to the 96.80 support.
Bias
Neutral to mildly bullish (short-term). Two days of gains and recovering momentum are encouraging for USD bulls, but the index remains below its 50-day moving average. A confirmed break above 98.50 would shift the bias firmly bullish.