Dollar Analysis: With subdued market activity, the dollar is poised for its first weekly gain in three weeks.
2026-04-24 19:12:36
Trading was subdued during the European session on Friday (April 24), with the US dollar poised for its first weekly gain in three weeks. The stalled peace talks between the US and Iran significantly dampened market expectations for a short-term easing of tensions in the Middle East, boosting demand for the safe-haven dollar. At 18:42 Beijing time, the US dollar index was at 98.7142/9150, down 0.12%.
Geopolitical tensions boost safe-haven buying
The ceasefire agreement between Lebanon and Israel, originally set to expire on Sunday, has been extended for three weeks. Meanwhile, Iran released footage of a raid on a large cargo ship, demonstrating its control over the Strait of Hormuz. The uncertainty surrounding the reopening of this crucial global shipping route continues to push up international oil prices.
Geopolitical uncertainty has boosted safe-haven buying of the US dollar. The dollar strengthened throughout March due to concerns about escalating regional conflict; however, some of its gains have since retreated this month as expectations of reconciliation have increased. Matsui Securities market analyst Sho Suzuki noted, "Oil prices and the dollar remain highly correlated; as oil prices gradually recover, the dollar's overall trend remains strong."
The Fed's interest rate adjustment supported the dollar.
Deutsche Bank analysts pointed out that strong US Purchasing Managers' Index (PMI) data further confirms the economic recovery and increasing upward pressure on prices. Therefore, the market expects the Federal Reserve is unlikely to cut interest rates before the end of the year. Given the low probability of a rate cut before the end of the year and the relatively high level of US Treasury yields, these factors generally support the rise of the US dollar index. The resilience of the US has restrained the pace of Fed rate cuts.
In fact, the composite PMI rose to 52.0 in April (compared to an expected 50.6). The manufacturing PMI was 54.0, and the services PMI was 51.3, both exceeding expectations. Furthermore, various sub-indicators also showed rising price pressures. This has led to a decrease in market expectations for further interest rate cuts by the Federal Reserve: the probability of a rate cut by the Fed by the end of the year is now only 20%, compared to 30% on Wednesday.
Meanwhile, the yield on the 2-year U.S. Treasury note rose 5 basis points, and the yield on the 10-year Treasury note rose 4 basis points, both closing higher on the day. Higher interest rate expectations will strengthen the attractiveness of the dollar.
ING: The US dollar index is expected to rise.
ING Bank analyst Chris Turner points out that tensions in the Gulf region and escalating inflationary pressures have made investors cautious about shorting the dollar. He emphasizes that U.S. Treasury yields are at high levels in the short term because the market is anticipating a potential surge in oil prices and the possibility of the Federal Reserve adopting a more hawkish monetary policy.
Turner believes the dollar index has room to rise, and today's University of Michigan inflation expectations survey data also helps support the dollar's performance. Risk factors in the Gulf region and the inflation situation are both supporting the dollar's price.
"For today, given the uncertainty surrounding the situation in the Gulf region, investors are likely reluctant to see their dollar balances turn negative." Due to the quiet period, Federal Reserve officials are unable to speak, and there are fewer social media posts about the Gulf region. Therefore, today's focus in the US will be on the final release of the University of Michigan Consumer Sentiment Survey data.
Turner stated, "Any upward adjustment could unsettle the Fed, pushing up yields on short-term U.S. Treasury bonds and strengthening the dollar. The 5-year to 5-year dollar inflation swap rate rose to 2.50% this week from 2.40%—the highest level since early February. The DXY index is poised to rise to around 99.15/20; a break above this resistance level could lead to further gains towards 99.50."
Technical Analysis
(US Dollar Index 4-hour chart source: FX678)
From the 4-hour chart, after completing the bottoming process at 97.6278, the US dollar index has formed a bullish pattern with the MA20 as the core support. The upward-opening Bollinger Bands and the moving average system provide positive verification, and the medium-term bullish trend momentum has not yet shown any signs of weakening.
The current price is in a technical correction phase after the rise. The RSI indicator has fallen back to 57.93. Although the bullish momentum has weakened compared to the previous peak, it is still running above the 50 neutral line and has not formed a top divergence after overbought conditions. The pullback is a normal correction within the bullish trend and has not disrupted the upward rhythm.
The key short-term level is around the Bollinger Middle Band at 98.56. If the pullback does not break below this range, the bullish trend will continue, with an upward move towards the previous high resistance of 98.94-99.19. However, if it breaks below this level, be wary of a weakening trend and a potential pullback to the lower Bollinger Band support at 98.17.
Geopolitical tensions boost safe-haven buying
The ceasefire agreement between Lebanon and Israel, originally set to expire on Sunday, has been extended for three weeks. Meanwhile, Iran released footage of a raid on a large cargo ship, demonstrating its control over the Strait of Hormuz. The uncertainty surrounding the reopening of this crucial global shipping route continues to push up international oil prices.
Geopolitical uncertainty has boosted safe-haven buying of the US dollar. The dollar strengthened throughout March due to concerns about escalating regional conflict; however, some of its gains have since retreated this month as expectations of reconciliation have increased. Matsui Securities market analyst Sho Suzuki noted, "Oil prices and the dollar remain highly correlated; as oil prices gradually recover, the dollar's overall trend remains strong."
The Fed's interest rate adjustment supported the dollar.
Deutsche Bank analysts pointed out that strong US Purchasing Managers' Index (PMI) data further confirms the economic recovery and increasing upward pressure on prices. Therefore, the market expects the Federal Reserve is unlikely to cut interest rates before the end of the year. Given the low probability of a rate cut before the end of the year and the relatively high level of US Treasury yields, these factors generally support the rise of the US dollar index. The resilience of the US has restrained the pace of Fed rate cuts.
In fact, the composite PMI rose to 52.0 in April (compared to an expected 50.6). The manufacturing PMI was 54.0, and the services PMI was 51.3, both exceeding expectations. Furthermore, various sub-indicators also showed rising price pressures. This has led to a decrease in market expectations for further interest rate cuts by the Federal Reserve: the probability of a rate cut by the Fed by the end of the year is now only 20%, compared to 30% on Wednesday.
Meanwhile, the yield on the 2-year U.S. Treasury note rose 5 basis points, and the yield on the 10-year Treasury note rose 4 basis points, both closing higher on the day. Higher interest rate expectations will strengthen the attractiveness of the dollar.
ING: The US dollar index is expected to rise.
ING Bank analyst Chris Turner points out that tensions in the Gulf region and escalating inflationary pressures have made investors cautious about shorting the dollar. He emphasizes that U.S. Treasury yields are at high levels in the short term because the market is anticipating a potential surge in oil prices and the possibility of the Federal Reserve adopting a more hawkish monetary policy.
Turner believes the dollar index has room to rise, and today's University of Michigan inflation expectations survey data also helps support the dollar's performance. Risk factors in the Gulf region and the inflation situation are both supporting the dollar's price.
"For today, given the uncertainty surrounding the situation in the Gulf region, investors are likely reluctant to see their dollar balances turn negative." Due to the quiet period, Federal Reserve officials are unable to speak, and there are fewer social media posts about the Gulf region. Therefore, today's focus in the US will be on the final release of the University of Michigan Consumer Sentiment Survey data.
Turner stated, "Any upward adjustment could unsettle the Fed, pushing up yields on short-term U.S. Treasury bonds and strengthening the dollar. The 5-year to 5-year dollar inflation swap rate rose to 2.50% this week from 2.40%—the highest level since early February. The DXY index is poised to rise to around 99.15/20; a break above this resistance level could lead to further gains towards 99.50."
Technical Analysis
(US Dollar Index 4-hour chart source: FX678)
From the 4-hour chart, after completing the bottoming process at 97.6278, the US dollar index has formed a bullish pattern with the MA20 as the core support. The upward-opening Bollinger Bands and the moving average system provide positive verification, and the medium-term bullish trend momentum has not yet shown any signs of weakening.
The current price is in a technical correction phase after the rise. The RSI indicator has fallen back to 57.93. Although the bullish momentum has weakened compared to the previous peak, it is still running above the 50 neutral line and has not formed a top divergence after overbought conditions. The pullback is a normal correction within the bullish trend and has not disrupted the upward rhythm.
The key short-term level is around the Bollinger Middle Band at 98.56. If the pullback does not break below this range, the bullish trend will continue, with an upward move towards the previous high resistance of 98.94-99.19. However, if it breaks below this level, be wary of a weakening trend and a potential pullback to the lower Bollinger Band support at 98.17.
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- 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.
