The US dollar index rebounded for two consecutive days, returning to the 98 level, awaiting a stress test.
2026-05-12 11:13:38
The US dollar index (DXY) continued its rebound in Asian trading on Tuesday, rising for the second consecutive session and trading around 98.10. As tensions in the Middle East remain high, global market risk appetite has declined significantly, with funds flowing back into traditional safe-haven assets such as the US dollar. Recent changes in market sentiment have been primarily influenced by the deterioration of diplomatic relations between the US and Iran. Previously, the market had anticipated that the two sides might ease regional tensions through diplomatic channels, but with negotiations stalled, market concerns about a potential escalation of the conflict have increased significantly.
US President Trump has expressed growing dissatisfaction with the current progress of Middle East negotiations. Sources within the White House indicate that the US government is more seriously discussing the possibility of resuming military operations. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf has publicly stated that the Iranian military is fully prepared to respond to any potential future attacks. Markets are concerned that the Middle East situation may re-enter a high-risk phase, and the security of shipping through the Strait of Hormuz remains the biggest source of uncertainty in the global energy market.
Against this backdrop, global investors rapidly reduced their holdings of risky assets and shifted towards safe-haven assets such as the US dollar and US Treasury bonds. As the global reserve currency, the US dollar once again received support from safe-haven flows, driving the dollar index higher. Meanwhile, the continued high international oil prices further amplified market risk sentiment. Brent crude is currently trading around $104, and the market is concerned that if the conflict in the Middle East escalates further, the global energy supply chain could suffer even greater disruption.
Rising energy prices are not only impacting global inflation expectations but are also beginning to alter market perceptions of the Federal Reserve's policy path. Market focus has now shifted to the upcoming release of the US April Consumer Price Index (CPI) data. The market anticipates that the overall US CPI year-on-year increase may rise to 3.7% in April, higher than the previous level of 3.3%, while core inflation is also expected to rebound slightly. Rising international oil prices are reigniting inflation risks in the US and may force the Federal Reserve to maintain high interest rates for an extended period.
If inflation data continues to exceed market expectations, the US dollar index may receive further support, as a high-interest-rate environment typically enhances the attractiveness of dollar-denominated assets. However, significant disagreement remains in the market regarding the Federal Reserve's future policies. On one hand, rising energy prices could lead to a resurgence of inflation; on the other hand, US economic growth has shown signs of slowing, and market expectations for future interest rate cuts have not completely disappeared.
From a technical perspective, the US dollar index is currently maintaining a low-level rebound on the daily chart, with the price regaining its position near the medium-term moving average. The MACD indicator shows signs of a golden cross at a low level, indicating a recovery in short -term bullish momentum. However, on the 4-hour chart, the 98.30 to 98.50 area still presents strong technical resistance, while the RSI indicator is gradually approaching high levels, suggesting that the US dollar index may face some consolidation in the short term. If the US dollar index effectively breaks through 98.50, it may further test the 99 level; however, if it falls below the 97.50 support, it may fall back to around 96.80.
Overall, the core logic of the US dollar market has gradually shifted from the previous "interest rate cut expectation trade" to a dual driver of "safe-haven demand + high inflation expectations." Future developments in the Middle East, US inflation data, and the Federal Reserve's policy path will continue to dominate the direction of the US dollar index's fluctuations.
Editor's Summary : The current trend of the US dollar index is once again dominated by global geopolitical risks. With the deteriorating situation in the Middle East and the continued shipping risks in the Strait of Hormuz, market demand for safe-haven assets has rebounded significantly, providing renewed support for the dollar through capital inflows. At the same time, high international oil prices have also fueled renewed global inflationary pressures, which may alter market expectations regarding the future policy direction of the Federal Reserve. If US inflation continues to rebound, the Fed may extend the period of maintaining high interest rates, thereby continuing to support the dollar's performance. However, the risk of a global economic slowdown and future changes in the international situation may still increase market volatility. Going forward, investors need to pay close attention to US CPI data, developments in the Middle East, and changes in global energy supply, as these factors will continue to determine the direction of the dollar market in the next stage.
US President Trump has expressed growing dissatisfaction with the current progress of Middle East negotiations. Sources within the White House indicate that the US government is more seriously discussing the possibility of resuming military operations. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf has publicly stated that the Iranian military is fully prepared to respond to any potential future attacks. Markets are concerned that the Middle East situation may re-enter a high-risk phase, and the security of shipping through the Strait of Hormuz remains the biggest source of uncertainty in the global energy market.
Against this backdrop, global investors rapidly reduced their holdings of risky assets and shifted towards safe-haven assets such as the US dollar and US Treasury bonds. As the global reserve currency, the US dollar once again received support from safe-haven flows, driving the dollar index higher. Meanwhile, the continued high international oil prices further amplified market risk sentiment. Brent crude is currently trading around $104, and the market is concerned that if the conflict in the Middle East escalates further, the global energy supply chain could suffer even greater disruption.
Rising energy prices are not only impacting global inflation expectations but are also beginning to alter market perceptions of the Federal Reserve's policy path. Market focus has now shifted to the upcoming release of the US April Consumer Price Index (CPI) data. The market anticipates that the overall US CPI year-on-year increase may rise to 3.7% in April, higher than the previous level of 3.3%, while core inflation is also expected to rebound slightly. Rising international oil prices are reigniting inflation risks in the US and may force the Federal Reserve to maintain high interest rates for an extended period.
If inflation data continues to exceed market expectations, the US dollar index may receive further support, as a high-interest-rate environment typically enhances the attractiveness of dollar-denominated assets. However, significant disagreement remains in the market regarding the Federal Reserve's future policies. On one hand, rising energy prices could lead to a resurgence of inflation; on the other hand, US economic growth has shown signs of slowing, and market expectations for future interest rate cuts have not completely disappeared.
From a technical perspective, the US dollar index is currently maintaining a low-level rebound on the daily chart, with the price regaining its position near the medium-term moving average. The MACD indicator shows signs of a golden cross at a low level, indicating a recovery in short -term bullish momentum. However, on the 4-hour chart, the 98.30 to 98.50 area still presents strong technical resistance, while the RSI indicator is gradually approaching high levels, suggesting that the US dollar index may face some consolidation in the short term. If the US dollar index effectively breaks through 98.50, it may further test the 99 level; however, if it falls below the 97.50 support, it may fall back to around 96.80.
Overall, the core logic of the US dollar market has gradually shifted from the previous "interest rate cut expectation trade" to a dual driver of "safe-haven demand + high inflation expectations." Future developments in the Middle East, US inflation data, and the Federal Reserve's policy path will continue to dominate the direction of the US dollar index's fluctuations.
Editor's Summary : The current trend of the US dollar index is once again dominated by global geopolitical risks. With the deteriorating situation in the Middle East and the continued shipping risks in the Strait of Hormuz, market demand for safe-haven assets has rebounded significantly, providing renewed support for the dollar through capital inflows. At the same time, high international oil prices have also fueled renewed global inflationary pressures, which may alter market expectations regarding the future policy direction of the Federal Reserve. If US inflation continues to rebound, the Fed may extend the period of maintaining high interest rates, thereby continuing to support the dollar's performance. However, the risk of a global economic slowdown and future changes in the international situation may still increase market volatility. Going forward, investors need to pay close attention to US CPI data, developments in the Middle East, and changes in global energy supply, as these factors will continue to determine the direction of the dollar market in the next stage.
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