DBS Group Analysis’s Philip Wee argues that the USD Index (DXY) is at an inflection level, consolidating in a 98–99 vary after retracing its post-Operation Epic Fury rally. He hyperlinks DXY resilience to elevated Brent costs close to USD 110 and unresolved Iran tensions, whereas Fed management modifications and potential European Central Financial institution (ECB) and Financial institution of England (BoE) hikes threaten the US coverage price benefit.
Greenback index holds as dangers converge
“The USD Index (DXY) has reached an inflection level, protecting largely to a 98-99 vary since mid-April, after retracing its post-Operation Epic Fury rally to 100.64 in late March.”
“Whereas the DXY signalled that the preliminary shock of the Center Jap escalation has been largely absorbed, USD bears hesitate to provoke a sustained sell-off as a result of lack of a definitive diplomatic breakthrough within the Iran battle, which continues to maintain Brent crude costs elevated close to USD 110 per barrel.”
“Till the market sees a reputable “off-ramp” that restores power stability, the USD’s ground is prone to maintain, whilst momentum indicators start to stall.”
“If a diplomatic pivot is achieved, we anticipate a pointy discount within the oil threat premium and a subsequent break in DXY help, with the narrative of capital rotating again into high-beta G10 currencies and rising market belongings.”
“The inner dynamics of the Fed are additional complicating the DXY’s trajectory.”
“Though the Fed is at the moment in a holding sample, rate of interest futures have begun pricing in a hawkish tilt for late 2026 following the much less dovish pivot on the March 25 FOMC assembly.”
(This text was created with the assistance of an Synthetic Intelligence instrument and reviewed by an editor.)
