The hawkish minutes from the Federal Reserve, coupled with continued tensions in the Middle East, kept the dollar index stable around 99.10.
2026-05-21 14:27:35
The US dollar index (DXY) remained stable in Asian trading on Thursday, trading around 99.10. Despite a slight pullback in the previous session, the dollar's overall trend remained firm, with market focus currently on the situation in the Middle East, the Federal Reserve's policy path, and changes in global energy risks.
Negotiations between the United States and Iran have become one of the most important risk variables in global financial markets. US President Trump stated that negotiations with Iran had entered the "final stage," which initially eased market concerns about disruptions to Middle Eastern energy supplies.
However, Trump also warned that the US might resume military operations in the coming days if Iran rejected its demands. This tough stance kept market risk aversion high. Iranian President Masoud Pezechzian subsequently responded that Iran would not yield to external pressure and emphasized that attempts to force Tehran to make concessions through threats were merely "fantasies."
The Strait of Hormuz handles approximately 20% of global seaborne crude oil shipments (shown in bold) , making the region's situation a matter of great concern to the market. Further disruptions to shipping through the Strait of Hormuz could create new shocks to the global energy supply chain, potentially pushing up international oil prices and global inflationary pressures.
Against this backdrop, the US dollar continues to receive funding support as the world's primary safe-haven currency. Markets are concerned that escalating tensions in the Middle East could not only disrupt global energy supplies but also further impact global economic growth and financial market stability. Meanwhile, the latest minutes from the Federal Reserve's April FOMC meeting further reinforced the support for the US dollar.
The meeting minutes showed that most Federal Reserve officials remained highly vigilant about inflation risks and believed that if inflation remained above the 2% target level for an extended period, the Fed might need to consider further interest rate hikes. Market expectations for the Fed to maintain high interest rates for an extended period have clearly intensified (shown in bold) , pushing US Treasury yields to remain high and enhancing the attractiveness of dollar assets.
The meeting minutes specifically mentioned that rising energy prices due to the Middle East wars could further increase inflationary pressures in the United States. This means that the Federal Reserve not only needs to address the issue of slowing economic growth but also needs to be wary of a resurgence of imported inflation. Some Federal Reserve officials pointed out that continued increases in energy prices could cause inflation to deviate from the policy target again and limit the scope for future interest rate cuts.
From a market structure perspective, the current strength of the US dollar stems primarily from two factors: first, rising global demand for safe-haven assets; and second, the continued significant advantage of US interest rates. As the market anticipates that the high-interest-rate environment in the US may persist for a longer period, global funds continue to flow into dollar assets. Furthermore, against the backdrop of uncertainty surrounding global economic growth, the US dollar remains considered a relatively safe asset.
However, the short-term gains of the US dollar index have been somewhat limited. With the previous sharp correction in international oil prices, US Treasury yields have recently shown signs of cooling, and market bets on further aggressive interest rate hikes by the Federal Reserve have eased slightly. In addition, the market is also paying attention to the upcoming US PMI data to assess whether there are signs of a slowdown in US economic activity. If manufacturing and service sector data weaken significantly, it could put some pressure on the short-term trend of the US dollar.
From a technical perspective, the US dollar index daily chart maintains an overall oscillating but slightly bullish structure. The exchange rate rebounded after finding support around 98.20 and is currently trading above the 20-day moving average. While the MACD indicator has shown some overbought conditions, it has not yet formed a clear death cross, indicating that the medium-term bullish trend has not ended. The RSI indicator remains around 56, suggesting that bullish momentum has slowed somewhat, but the overall trend remains bullish.
From a resistance and support perspective, the initial resistance level is around 99.50. A break above this level could lead to further challenges of the 100 psychological level and the 100.40 area. Key support levels are around 98.70 and 98.20. A break below these levels could trigger a period of consolidation for the US dollar index.
From the 4-hour chart, the US dollar index is maintaining a high-level consolidation pattern in the short term. The price is trading near the middle Bollinger Band, indicating a strong wait-and-see attitude in the market. The MACD indicator is gradually converging above the zero line, suggesting a weakening of short-term bullish momentum; the RSI indicator is around 50, reflecting the current uncertainty in market direction. If the situation in the Middle East escalates further or the Federal Reserve continues to release hawkish signals, the US dollar index still has room for further upward movement.
Editor's Summary : The core drivers of the current US dollar index are primarily safe-haven demand stemming from the Middle East situation and the expectation that the Federal Reserve will maintain a hawkish policy stance. In the short term, shipping risks in the Strait of Hormuz, progress in US-Iran negotiations, and changes in global energy prices will continue to dominate market sentiment. If the geopolitical situation deteriorates further, safe-haven demand for the dollar may continue to strengthen; conversely, if the Middle East situation eases, the dollar may experience a period of correction. Meanwhile, the Federal Reserve's concerns about inflation risks are clearly intensifying. Against the backdrop of unstable energy prices, the high-interest-rate environment in the US may persist for a longer period, which will continue to provide medium- to long-term support for the dollar. Overall, given that global risk aversion has not yet significantly subsided and the Federal Reserve maintains a hawkish stance, the US dollar index is likely to maintain a relatively strong and volatile pattern in the short term.
Negotiations between the United States and Iran have become one of the most important risk variables in global financial markets. US President Trump stated that negotiations with Iran had entered the "final stage," which initially eased market concerns about disruptions to Middle Eastern energy supplies.
However, Trump also warned that the US might resume military operations in the coming days if Iran rejected its demands. This tough stance kept market risk aversion high. Iranian President Masoud Pezechzian subsequently responded that Iran would not yield to external pressure and emphasized that attempts to force Tehran to make concessions through threats were merely "fantasies."
The Strait of Hormuz handles approximately 20% of global seaborne crude oil shipments (shown in bold) , making the region's situation a matter of great concern to the market. Further disruptions to shipping through the Strait of Hormuz could create new shocks to the global energy supply chain, potentially pushing up international oil prices and global inflationary pressures.
Against this backdrop, the US dollar continues to receive funding support as the world's primary safe-haven currency. Markets are concerned that escalating tensions in the Middle East could not only disrupt global energy supplies but also further impact global economic growth and financial market stability. Meanwhile, the latest minutes from the Federal Reserve's April FOMC meeting further reinforced the support for the US dollar.
The meeting minutes showed that most Federal Reserve officials remained highly vigilant about inflation risks and believed that if inflation remained above the 2% target level for an extended period, the Fed might need to consider further interest rate hikes. Market expectations for the Fed to maintain high interest rates for an extended period have clearly intensified (shown in bold) , pushing US Treasury yields to remain high and enhancing the attractiveness of dollar assets.
The meeting minutes specifically mentioned that rising energy prices due to the Middle East wars could further increase inflationary pressures in the United States. This means that the Federal Reserve not only needs to address the issue of slowing economic growth but also needs to be wary of a resurgence of imported inflation. Some Federal Reserve officials pointed out that continued increases in energy prices could cause inflation to deviate from the policy target again and limit the scope for future interest rate cuts.
From a market structure perspective, the current strength of the US dollar stems primarily from two factors: first, rising global demand for safe-haven assets; and second, the continued significant advantage of US interest rates. As the market anticipates that the high-interest-rate environment in the US may persist for a longer period, global funds continue to flow into dollar assets. Furthermore, against the backdrop of uncertainty surrounding global economic growth, the US dollar remains considered a relatively safe asset.
However, the short-term gains of the US dollar index have been somewhat limited. With the previous sharp correction in international oil prices, US Treasury yields have recently shown signs of cooling, and market bets on further aggressive interest rate hikes by the Federal Reserve have eased slightly. In addition, the market is also paying attention to the upcoming US PMI data to assess whether there are signs of a slowdown in US economic activity. If manufacturing and service sector data weaken significantly, it could put some pressure on the short-term trend of the US dollar.
From a technical perspective, the US dollar index daily chart maintains an overall oscillating but slightly bullish structure. The exchange rate rebounded after finding support around 98.20 and is currently trading above the 20-day moving average. While the MACD indicator has shown some overbought conditions, it has not yet formed a clear death cross, indicating that the medium-term bullish trend has not ended. The RSI indicator remains around 56, suggesting that bullish momentum has slowed somewhat, but the overall trend remains bullish.
From a resistance and support perspective, the initial resistance level is around 99.50. A break above this level could lead to further challenges of the 100 psychological level and the 100.40 area. Key support levels are around 98.70 and 98.20. A break below these levels could trigger a period of consolidation for the US dollar index.
From the 4-hour chart, the US dollar index is maintaining a high-level consolidation pattern in the short term. The price is trading near the middle Bollinger Band, indicating a strong wait-and-see attitude in the market. The MACD indicator is gradually converging above the zero line, suggesting a weakening of short-term bullish momentum; the RSI indicator is around 50, reflecting the current uncertainty in market direction. If the situation in the Middle East escalates further or the Federal Reserve continues to release hawkish signals, the US dollar index still has room for further upward movement.
Editor's Summary : The core drivers of the current US dollar index are primarily safe-haven demand stemming from the Middle East situation and the expectation that the Federal Reserve will maintain a hawkish policy stance. In the short term, shipping risks in the Strait of Hormuz, progress in US-Iran negotiations, and changes in global energy prices will continue to dominate market sentiment. If the geopolitical situation deteriorates further, safe-haven demand for the dollar may continue to strengthen; conversely, if the Middle East situation eases, the dollar may experience a period of correction. Meanwhile, the Federal Reserve's concerns about inflation risks are clearly intensifying. Against the backdrop of unstable energy prices, the high-interest-rate environment in the US may persist for a longer period, which will continue to provide medium- to long-term support for the dollar. Overall, given that global risk aversion has not yet significantly subsided and the Federal Reserve maintains a hawkish stance, the US dollar index is likely to maintain a relatively strong and volatile pattern in the short term.
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