The Dollar contradicts the peace trade – EUR/USD, GBP/USD & Dollar Index (DXY) overview

US stock markets opened with strong optimism, but other asset classes are not as confident.

While equities are rising, catching up to their previous session’s futures runs, currency and commodity markets remain cautious about the unresolved issues in the latest diplomatic talks.

The overall geopolitical outlook seems positive, as both sides have agreed to reopen the Strait of Hormuz in the next 30 days and work toward a long-term peace process within 60 days.

Still, a final agreement is proving difficult. Reports show that Iranian negotiators are stuck on key issues, especially the release of frozen funds and where Tehran’s enriched nuclear stockpiles will go.

Ongoing diplomatic tensions are causing a quick shift in the commodities market, leading to a rebound in Crude oil prices, especially Brent.

The continued geopolitical risks and concerns about inflation are giving strong support to the US Dollar, the subject of this morning’s analysis

Even though hopes for peace are pushing risk assets to new highs, the US Dollar remains strong, going against the general trend.

We will look at the Dollar Index, EUR/USD, and GBP/USD to spot how the recent peace flows have already impacted the FX Market and where to look next.

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The US Dollar is currently consolidating between 99.00 and 99.50, a much higher range compared to the end-April trading (closer to 98.00).

Bulls are actually pushing the action above the 4H 50-period MA as we speak, and this points to a coming test of the upper bound of the range.

With the RSI momentum also picking up, the action looks to be more bullish for the US dollar in coming times – Watch for reactions at the 99.50 to see if momentum continues to pick up from there.

Levels of interest for the Dollar Index:

Resistance Levels

• 99.40 to 99.50 Resistance (range highs)
• Initial War Spike 99.68
• 100.00 to 100.50 Main Resistance Zone
• War Highs 100.544

Support Levels

• 99.00 Intraday Pivot (range lows)
• 98.50 to 98.70 War Pivot now support
• Support 97.40 to 97.60 (triple bottom)
• 2025 Lows 96.40 to 96.80 Support
• Range lows at Early 2022 Consolidation just below 96.00

GBP/USD kept rallying above the pivot zone but stalled right at its 4H 200-period (1.35).

Currently retracing back to the pivot zone, the action is more mixed than fully bearish, hence traders could wait for either a double top (around the MA) or a break below 1.3420 (50-MA) to push for lower action.

Any close above the 200-MA adds more bullish momentum.

Levels of interest for AUD/USD:

Resistance Levels

• 4H 200-period (1.35)
• December Resistance 1.36 (range highs)
• pre-FOMC Highs 1.36010
• Resistance 1.37 zone
• 2025 Resistance around 1.38

Support Levels

• Key Pivot 1.34 to 1.3440
• Pivotal Support 1.3280 – 1.33
• 1.32 War Support

EUR/USD is rejecting its 4H 50-period MA with the RSI momentum also turning bearish, pointing to more downside ahead.

Failing to breach the mid-level of the longer-run bear channel, the lower bound (1.1580) could soon be retested.

Any break and close above 1.1660 voids the bear formation.

Levels to place on your EUR/USD charts:

Resistance Levels

• Pivot 1.1635 – 1.1655
• 1.17 to 1.1720 March Resistance
• Resistance Zone around 1.18 (+/- 150 pips)
• 1.1830 June 2025 highs

Support Levels

• 1.1580 channel lower bound
• 1.1540 to 1.1580 War Support
• 1.1475 to 1.15 November Support
• War lows 1.1410

Safe Trades!

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