USD gathers momentum after Trump comments: Brace for more upside

The US Dollar Index (DXY), the world's reserve currency, regained strong momentum following a correction during the early Thursday European session. Despite the recent pullback, the overall technical outlook remains neutral to bullish. This correction is viewed as healthy, helping the index to exit overbought territory rather than signaling a downward trend.

USD momentum boosted by Trump’s speech on Iran

The dollar index rebounded after a two-day decline, spurred by a speech from US President Trump that diminished hopes for a swift resolution to the military conflict with Iran. "We’re going to hit them extremely hard over the next two to three weeks. We’re going to bring them back to the Stone Age, where they belong," Trump said. This rhetoric strengthened the US dollar as investors sought a safe haven amid escalating tensions. Additionally, robust US economic data supported the bullish momentum.

Here’s what to watch for the rest of the week

The US dollar may face increased volatility in the upcoming sessions, influenced by forthcoming US jobs data that could sway the Fed’s monetary policy. Following stronger-than-expected reports on US ADP jobs, retail sales, and ISM manufacturing, market participants and investors are keenly awaiting Friday’s employment figures. Additionally, ongoing geopolitical developments and updates on the war remain important factors to monitor.

USD Technical Outlook

From a technical perspective, the USD maintains its upward trend despite the recent pullback, continuing to form higher highs. Bulls remain dominant on longer time frames. Currently, the DXY trades above the 100 level. Immediate resistance is expected near 100.30, with a potential breakout targeting the next resistance zone around 100.60 to 100.70.

On the downside, key support lies at 99.30; a daily close below this level could signal a bearish shift, potentially leading to a further decline toward 99.00 to 98.80.

 

Warning! This material is not intended as investment advice. Past performance data does not guarantee future returns. Investing in foreign currencies may affect your returns due to their fluctuations. Any transaction with securities may result in both profits and losses. The assumptions and expectations set forth in this material are only estimates that may not be accurate and may change depending on current economic conditions. These statements do not guarantee future returns.