Dollar Surges on Fresh Iran War Uncertainty
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USD Pushing Higher Again
Risks of a fresh breakout in USD are rising today following hawkish comments from Trump overnight. The US President’s threat to escalate the Iran war before ultimately ending it in a few weeks’ time have created fresh uncertainty among investors today with energy prices spiking, stocks and broader commodities falling and USD surging higher. The cross-market impact we’re seeing today from Trump’s comments serve as a reminder of just how sensitive traders are to the situation. With rude prices spiking back above $100 p/b, USD is rising on a revival of hawkish Fed expectations, having fallen earlier in the week on the view that the Fed might still cut late this year if the war does end this month.
All Eyes (And Ears) on Trump
The risk now is that Trump U-turns on his signal this week that the war will end in coming weeks. If this is the case, the current market dynamic (higher oil/higher USD/weaker stocks) has plenty of room to develop further. As such, incoming news flow on the war will be key for the Dollar. Any further aggressive rhetoric or escalation in the conflict should see USD pushing higher near-term while any softening in tone from Trump or positive news on the negotiations front should see crude cooling, pulling USD lower again.
Technical Views
DXY
For now, DXY remains supported by the bull channel which has framed the recovery off YTD lows. For now, the 100.36 level is holding as resistance (and 2-yr range highs). If bulls can break this level, this should encourage fresh momentum towards 101.91 next and the bull channel highs. To the downside, 99.15 is the local support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.