Today, the dollar index rose above last week’s peak around the 99.68 level, setting a new high for 2026. This movement is supported by a tense fundamental backdrop:
- → Inflationary pressures from rising oil prices. Markets may be pricing in a “higher for longer” scenario, with elevated Fed rates persisting.
- → Safe-haven demand. Escalation in the Middle East—including strikes on Iran and the rise of hardline leader Mojtaba Khamenei in Tehran—may push market participants towards defensive strategies and the US dollar.
- → Weakness in other currencies. The Middle East conflict can weigh on the yen and euro, as European and Japanese economies remain highly sensitive to energy prices.
Technical Analysis of the DXY Chart
On the morning of 3 March, analysing the DXY chart, we:
- → drew an ascending channel (highlighted in blue);
- → anticipated that military escalation could drive the DXY index to the upper boundary of the channel.
Indeed, on the same day, the dollar index surged:
- → breaking above the channel’s upper boundary;
- → the RSI indicator entered overbought territory;
- → price slightly exceeded the January peak, signalling a possible bull trap.
As indicated by the first arrow, a long upper wick formed at the peak on 3 March, showing seller activity around the 99.60 level. Today’s brief surpassing of last week’s peak confirms this thesis, resembling a Liquidity Grab pattern.
On the other hand, buyers:
- → demonstrated strength at the market open (the bullish gap may continue to act as support);
- → can rely on support from the line dividing the upper half of the channel into two quarters (shown by the second arrow).
Traders should therefore be prepared for a scenario where DXY fluctuations show signs of stabilising near the yearly highs. Key developments around Iran are likely to have the strongest influence on the evolving balance.
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