US Dollar Index Forecast: Bearish Trend Persists Near 98.00 Amid Geopolitical Easing

US Dollar Index Forecast: Bearish Trend Persists Near 98.00 Amid Geopolitical Easing

The US Dollar Index (DXY) continues its bearish trajectory, declining to around 97.90 in early European trading on Wednesday. Market sentiment has shifted as easing tensions in the Middle East, particularly between Iran and Israel, weigh on the Greenback’s safe-haven appeal.

Ceasefire Optimism Pressures the Dollar

Investor optimism grew after US President Donald Trump confirmed a ceasefire agreement between Iran and Israel, calming markets and weakening demand for USD. The reduced geopolitical risk is helping investors rotate into riskier assets, further pressuring the US Dollar.

Technical Indicators Point to More Downside

From a technical analysis perspective, the DXY remains below the critical 100-day Exponential Moving Average (EMA), reinforcing the bearish bias. The 14-day Relative Strength Index (RSI) sits around 37.95, indicating momentum remains with the sellers.

Key Technical Levels:

• Support:
  • 97.75 – lower Bollinger Band
  • 97.61 – low from June 12
  • 96.55 – multi-month low from February 25, 2022
• Resistance:
  • 99.16 – upper resistance from recent swing highs

Outlook

Unless Fed Chair Jerome Powell’s testimony later today shifts market expectations significantly, the DXY is likely to remain under pressure in the near term. A confirmed break below 97.75 could accelerate losses, with 96.55 as the next key target for bears.

Related Content on Tredu.com:

• What’s Driving the Weakness in the US Dollar?
• Middle East Ceasefire Impact on Forex and Commodities
• Top Support and Resistance Levels to Watch This Week