DXY Holds Near 99.60 as Iran Tensions Lift Safe-Haven Demand

DXY holds near 99.60 as Iran tensions boost safe-haven demand, while weaker US data and fading Fed hike bets pressure the dollar’s outlook.

The US Dollar Index (DXY) is holding near 99.60 after three consecutive daily declines, finding modest support from renewed safe-haven demand as tensions between the United States and Iran remain elevated. The index, which tracks the US dollar against six major currencies, is trading around 99.60 during Asian hours on Tuesday.

Iran Tensions Support the Dollar

Geopolitical uncertainty is providing some support for the Greenback. US President Donald Trump has indicated that Washington does not intend to renew an expiring agreement with Iran, pointing to the ongoing naval blockade of Iranian ports as evidence of US leverage. He has also renewed his proposal for the strategically important waterway to come under total US control.

Iran has pushed back against Washington’s position. Foreign Ministry spokesman Esmail Baghaei said negotiations remain difficult because of security concerns and what he described as obstructionist actions, while demanding that the US remove its blockade before progress can be made.

For currency markets, the standoff is adding a layer of risk that can encourage investors to seek liquid assets such as the US dollar.

• DXY is trading near 99.60.
• The index has ended a three-day losing streak.
• Iran-US tensions are reinforcing safe-haven demand.

Fed Rate Hike Bets Lose Momentum

The dollar’s broader outlook remains constrained by weaker expectations for Federal Reserve tightening. A surprise decline in July US Nonfarm Payrolls, combined with softer-than-expected consumer inflation data last week, has reduced expectations for a near-term interest-rate increase.

According to the CME FedWatch Tool, markets now price roughly a 35% probability of a Fed rate hike at the next policy meeting, down from 47% a month earlier. Lower rate expectations can weigh on the dollar because they reduce the potential yield advantage of US assets.

Scotiabank strategists also see broad-based dollar weakness continuing. They argue that softer US economic data is reducing expectations for additional Fed tightening, while concerns about US fiscal conditions are contributing to a steeper Treasury yield curve.

DXY Technical Outlook Remains Bearish

Technically, the DXY continues to show a cautious bearish bias. Spot price near 99.60 remains below the nine-period exponential moving average at 99.79 and the 50-period EMA at 100.21. The positioning of both averages above the index suggests that short- and medium-term rallies remain vulnerable to selling pressure.

The 14-day Relative Strength Index stands at 37.51, below the neutral 50 level. While the reading signals persistent downside momentum, it has not yet reached the traditional oversold threshold near 30.

For now, 99.79 is an important near-term resistance area, followed by 100.21. A sustained move below 99.60 could reinforce bearish momentum, while a recovery above the short-term EMA would improve the technical outlook.