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United States Dollar Index holds steady near 100.00 as bulls await US NFP amid Iran risks
- DXY preserves the previous day’s modest gains amid persistent geopolitical uncertainties.
- Recovering oil prices fuel inflation fears and lift Fed hike bets, further supporting the USD.
- Bulls seem hesitant and keenly await the release of the crucial US NFP report later today.
The United States Dollar Index (DXY), which tracks the Greenback against a basket of currencies, consolidates during the Asian session on Friday as traders keenly await the release of the closely-watched US monthly jobs data. In the meantime, persistent geopolitical uncertainties and bets for at least one rate hike by the US Federal Reserve (Fed) hold the index steady around the 100.00 psychological mark.
In the latest developments surrounding the Middle East crisis, a Saudi official said that some Iraqi militia factions, in coordination with Yemen’s Iran-backed Houthis, are planning to attack the kingdom in the very near future. This raises the risk of a wider regional conflict and prompts traders to again price in the geopolitical risk premium, which, in turn, is seen as a key factor acting as a tailwind for the safe-haven US Dollar (USD).
Meanwhile, Houthis claimed responsibility for an attack on a Saudi oil tanker in the Gulf of Aden. Moreover, reports suggested that Iran is reviewing a plan that would ban US and Israeli vessels from the Strait of Hormuz. The latest developments led to the overnight rise in oil prices, reviving inflation fears and fueling hawkish Fed expectations. This remains supportive of elevated US bond yields and further underpins the USD.
Bullish traders, however, seem hesitant to place aggressive bets and look to the crucial US Nonfarm Payrolls (NFP) report for more cues about the Fed’s policy path. The outlook, along with headlines surrounding the Middle East crisis, will play a key role in influencing the USD. Nevertheless, the DXY seems poised to register modest weekly gains, though a break above the weekly range is needed to back the case for further gains.
DXY daily chart
Technical Analysis
The DXY holds above the 100-day Simple Moving Average (SMA) at 99.74, keeping a mildly bullish near-term tone as price respects this dynamic floor after recovering from the recent sub-99.80 lows. A close above this moving average would keep the path open for further recovery, while a decisive break below 99.74 would hint at a deeper corrective phase.
