US Dollar Index Recovers Above 98.00 as Ceasefire Optimism Fades

The US Dollar Index (DXY) has recovered to trade just above 98.00 on Wednesday, trimming part of the sharp 1.3% drop seen earlier this week. This rebound reflects fading enthusiasm over the Middle East ceasefire, which had initially lifted risk appetite and pressured safe-haven flows into the dollar.

Markets are now shifting into a more cautious stance. The ongoing ceasefire between Iran and Israel continues into its second day, but a US intelligence report warning that Iran's nuclear ambitions were only temporarily disrupted has reignited geopolitical concerns.

Powell, Data, and Sentiment Driving Mixed Signals

• Fed Chair Jerome Powell remained hesitant during his Congressional testimony, showing no urgency to cut interest rates, despite soft inflation signals.
• Meanwhile, a strong US Consumer Confidence reading appears to contradict Powell’s cautious stance, offering some support to the USD.
• Investors are now waiting for further macro data this week before taking clearer positions.

Technical Note

DXY has rebounded above its short-term support and could face resistance near 98.60. A sustained move higher would require more hawkish Fed signals or renewed geopolitical risk.

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