Geopolitical conflicts and inflation expectations are supporting the US dollar, with the DXY approaching 98, but policy uncertainty is limiting upside potential.
2026-03-02 13:39:33
During Monday's Asian trading session, the US dollar index (DXY) remained around 98. As military conflicts in the Middle East continue to escalate, market risk appetite has declined significantly, with funds flowing back into highly liquid safe-haven assets such as the US dollar.
Military operations between the United States, Israel, and Iran continue, with airstrikes and missile attacks taking place in multiple locations across the Middle East, further increasing market concerns about the escalation of the conflict. Safe-haven demand typically drives up demand for the US dollar, supporting a stronger dollar index.
Meanwhile, the U.S. Producer Price Index (PPI) came in higher than market expectations, reinforcing market expectations that the Federal Reserve will maintain high interest rates for a longer period. A high-interest-rate environment typically increases the attractiveness of dollar assets and supports the dollar's performance through interest rate differentials.
However, the upside potential of the US dollar remains constrained by policy uncertainties. On February 20, the US Supreme Court overturned the previous "reciprocal tariff" policy, and subsequently, the US president attempted to implement a new global tariff system by invoking relevant provisions of the 1974 Trade Act.
Changes in trade policy may affect global capital flows and market risk sentiment, thus causing temporary fluctuations in the US dollar. Therefore, the current trend of the US dollar exhibits a structure where safe-haven demand and policy uncertainty intertwine.
From a daily chart perspective, the DXY indicator remains within a high-level consolidation range. After finding support near 97, the index rebounded to the 98 level, indicating that the bulls still hold a short-term advantage. The daily RSI is around 55, in a neutral-to-strong zone, suggesting that upward momentum has not yet entered overbought territory.
The MACD indicator remains above the zero line, but the growth of the momentum bars is slowing, indicating a weakening of the upward trend. The first resistance level to watch is the 98.50 area, which corresponds to a previous area of dense trading volume; a successful breakout could see the index further test the 99 level.
On the downside, 97.50 is a key short-term support level; a break below this level could lead to a pullback to the 97 or even 96.80 area. Looking at the 4-hour chart, the index is moving along a short-term upward channel, but the upward slope has narrowed. Short-term moving averages remain in a bullish alignment, but multiple attempts to break through have failed, indicating a short-term technical correction is needed.
The RSI has fallen back from around 60, indicating that short-term overbought pressure is gradually emerging. Overall, if the index can stabilize above 97.50, the bullish structure remains intact; if it falls below this level, it may trigger a deeper pullback.
Editor's Note:
The core drivers of the current dollar's performance remain safe-haven flows and interest rate expectations. Geopolitical conflicts typically strengthen the dollar's advantage in the initial stages, but as the market gradually digests the risk shock, the dollar's upward momentum tends to weaken marginally. Whether the DXY can break through the 99 mark in the future depends primarily on whether the Middle East conflict escalates further and whether US inflation data can remain high.
Military operations between the United States, Israel, and Iran continue, with airstrikes and missile attacks taking place in multiple locations across the Middle East, further increasing market concerns about the escalation of the conflict. Safe-haven demand typically drives up demand for the US dollar, supporting a stronger dollar index.
Meanwhile, the U.S. Producer Price Index (PPI) came in higher than market expectations, reinforcing market expectations that the Federal Reserve will maintain high interest rates for a longer period. A high-interest-rate environment typically increases the attractiveness of dollar assets and supports the dollar's performance through interest rate differentials.
However, the upside potential of the US dollar remains constrained by policy uncertainties. On February 20, the US Supreme Court overturned the previous "reciprocal tariff" policy, and subsequently, the US president attempted to implement a new global tariff system by invoking relevant provisions of the 1974 Trade Act.
Changes in trade policy may affect global capital flows and market risk sentiment, thus causing temporary fluctuations in the US dollar. Therefore, the current trend of the US dollar exhibits a structure where safe-haven demand and policy uncertainty intertwine.
From a daily chart perspective, the DXY indicator remains within a high-level consolidation range. After finding support near 97, the index rebounded to the 98 level, indicating that the bulls still hold a short-term advantage. The daily RSI is around 55, in a neutral-to-strong zone, suggesting that upward momentum has not yet entered overbought territory.
The MACD indicator remains above the zero line, but the growth of the momentum bars is slowing, indicating a weakening of the upward trend. The first resistance level to watch is the 98.50 area, which corresponds to a previous area of dense trading volume; a successful breakout could see the index further test the 99 level.
On the downside, 97.50 is a key short-term support level; a break below this level could lead to a pullback to the 97 or even 96.80 area. Looking at the 4-hour chart, the index is moving along a short-term upward channel, but the upward slope has narrowed. Short-term moving averages remain in a bullish alignment, but multiple attempts to break through have failed, indicating a short-term technical correction is needed.
The RSI has fallen back from around 60, indicating that short-term overbought pressure is gradually emerging. Overall, if the index can stabilize above 97.50, the bullish structure remains intact; if it falls below this level, it may trigger a deeper pullback.
Editor's Note:
The core drivers of the current dollar's performance remain safe-haven flows and interest rate expectations. Geopolitical conflicts typically strengthen the dollar's advantage in the initial stages, but as the market gradually digests the risk shock, the dollar's upward momentum tends to weaken marginally. Whether the DXY can break through the 99 mark in the future depends primarily on whether the Middle East conflict escalates further and whether US inflation data can remain high.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
