Tensions in the Middle East, coupled with a hawkish stance from the Federal Reserve, boosted demand for safe-haven assets, causing the US dollar index to continue its upward trend.
2026-03-23 13:27:22
The US dollar index maintained its strength in early European trading on Monday, currently trading around 99.65 . Driven by both escalating geopolitical risks and a shift towards a more hawkish policy outlook, the dollar has shown considerable resilience, while market risk aversion has clearly intensified.
From a fundamental perspective, the continued tensions in the Middle East are a significant factor driving the strengthening of the US dollar. Market surveys indicate that the US has sent a strong signal, demanding the restoration of key energy routes or threatening further action. In response, Iran stated that if such actions are implemented, it will take retaliatory measures, including closing key energy transport routes. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport , and its potential risks have significantly increased market concerns about energy supply disruptions.
Against this backdrop, rapidly rising energy prices have further fueled global inflation expectations. This "imported inflation" pressure has prompted the market to reassess the Federal Reserve's policy path. Although the market previously anticipated room for future interest rate cuts, the current environment clearly favors maintaining high interest rates or even further tightening. The resonant combination of rising inflation expectations and persistently high interest rates has provided solid support for the US dollar.
Joseph Capso, head of international economics at Commonwealth Bank of Australia, said: "If markets begin to price in a new round of tightening in the United States, the US dollar will strengthen significantly against all currencies."
From a market perspective, the US dollar, as a major global safe-haven currency, is typically favored by investors during periods of frequent risk events. Current geopolitical uncertainties are not only driving up energy prices but also prompting capital inflows into dollar assets, further strengthening the upward momentum of the dollar index.
From a technical perspective, on the daily chart, the US dollar index rebounded after finding support near the 98 level and has now regained its position above the short-term moving average system, testing resistance near the 100 psychological level (shown in bold) . The overall structure shows an upward trend with fluctuations; if it breaks through this level, it is expected to further test the 101-102 range. In terms of momentum indicators, the RSI is gradually rising into the upper-neutral zone, indicating that bullish momentum is strengthening.
From a 4-hour chart perspective, the US dollar index shows a clear upward channel structure, with short-term moving averages in a bullish alignment and the price moving along the upper Bollinger Band, indicating short-term market strength. The MACD indicator is above the zero line, and the momentum bars continue to expand, suggesting that the upward trend has not yet ended. However, if the short-term rally fails to effectively break through the 100 level, a technical pullback may occur, with support levels at 99 and 98.50 to watch.
Looking ahead, the market will focus on the upcoming release of the preliminary S&P Global Manufacturing PMI for March in the United States. If the data falls short of expectations, it could weaken market confidence in the resilience of the US economy, thus putting some pressure on the US dollar; conversely, strong data could further strengthen the upward trend of the US dollar.
Editor's Summary:
The current rise in the US dollar index is primarily driven by geopolitical risks and policy expectations, supported by both safe-haven demand and a high-interest-rate environment. In the short term, the dollar still has upward momentum, but caution is advised regarding volatility risks from key data releases. In the medium to long term, the dollar's trajectory will depend on the inflation path and the pace of the Federal Reserve's policy adjustments. Given these multiple uncertainties, market volatility may continue to intensify, requiring investors to remain flexible.
From a fundamental perspective, the continued tensions in the Middle East are a significant factor driving the strengthening of the US dollar. Market surveys indicate that the US has sent a strong signal, demanding the restoration of key energy routes or threatening further action. In response, Iran stated that if such actions are implemented, it will take retaliatory measures, including closing key energy transport routes. The Strait of Hormuz handles approximately 20% of global seaborne crude oil transport , and its potential risks have significantly increased market concerns about energy supply disruptions.
Against this backdrop, rapidly rising energy prices have further fueled global inflation expectations. This "imported inflation" pressure has prompted the market to reassess the Federal Reserve's policy path. Although the market previously anticipated room for future interest rate cuts, the current environment clearly favors maintaining high interest rates or even further tightening. The resonant combination of rising inflation expectations and persistently high interest rates has provided solid support for the US dollar.
Joseph Capso, head of international economics at Commonwealth Bank of Australia, said: "If markets begin to price in a new round of tightening in the United States, the US dollar will strengthen significantly against all currencies."
From a market perspective, the US dollar, as a major global safe-haven currency, is typically favored by investors during periods of frequent risk events. Current geopolitical uncertainties are not only driving up energy prices but also prompting capital inflows into dollar assets, further strengthening the upward momentum of the dollar index.
From a technical perspective, on the daily chart, the US dollar index rebounded after finding support near the 98 level and has now regained its position above the short-term moving average system, testing resistance near the 100 psychological level (shown in bold) . The overall structure shows an upward trend with fluctuations; if it breaks through this level, it is expected to further test the 101-102 range. In terms of momentum indicators, the RSI is gradually rising into the upper-neutral zone, indicating that bullish momentum is strengthening.
From a 4-hour chart perspective, the US dollar index shows a clear upward channel structure, with short-term moving averages in a bullish alignment and the price moving along the upper Bollinger Band, indicating short-term market strength. The MACD indicator is above the zero line, and the momentum bars continue to expand, suggesting that the upward trend has not yet ended. However, if the short-term rally fails to effectively break through the 100 level, a technical pullback may occur, with support levels at 99 and 98.50 to watch.
Looking ahead, the market will focus on the upcoming release of the preliminary S&P Global Manufacturing PMI for March in the United States. If the data falls short of expectations, it could weaken market confidence in the resilience of the US economy, thus putting some pressure on the US dollar; conversely, strong data could further strengthen the upward trend of the US dollar.
Editor's Summary:
The current rise in the US dollar index is primarily driven by geopolitical risks and policy expectations, supported by both safe-haven demand and a high-interest-rate environment. In the short term, the dollar still has upward momentum, but caution is advised regarding volatility risks from key data releases. In the medium to long term, the dollar's trajectory will depend on the inflation path and the pace of the Federal Reserve's policy adjustments. Given these multiple uncertainties, market volatility may continue to intensify, requiring investors to remain flexible.
- 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.
