Signs of easing tensions between the US and Iran weakened safe-haven demand, causing the dollar index to rise and then fall.
2026-07-10 13:29:02
The dollar index continued to be pressured in Asian trading on Friday, with the DXY index, which measures the dollar's performance against six major currencies, falling about 0.3% to around 100.60, a near three-week low. The market is reassessing the impact of changes in US-Iran relations, the Federal Reserve's future policy path, and global risk sentiment on the dollar's trajectory.
The recent weakening of the US dollar is mainly due to decreased demand for safe-haven assets. Previously, escalating tensions between the US and Iran drove funds to traditional safe-haven assets such as the US dollar, but recent news indicates signs of easing tensions. Market sources suggest that the US remains committed to advancing the previously reached understanding framework with Iran, and related technical communications are ongoing.
Although US President Trump had previously stated that the agreement was over, his recent revelation that Iran was seeking a deal has led the market to reassess the possibility of further escalation of the conflict. Signs of easing tensions between the US and Iran have weakened the safe-haven appeal of the US dollar , becoming a significant factor driving its continued decline.
Looking at the performance of major currencies, the US dollar weakened against most major currencies, with the Japanese yen showing relative strength, indicating that some safe-haven funds are flowing back into Asian currencies. Meanwhile, non-US dollar currencies such as the euro, pound sterling, and Australian dollar saw some rebound, reflecting an improvement in market risk appetite. However, the downward trend of the US dollar remains limited by changes in the energy market. Although there are signs of easing tensions in the Middle East, supply risks have not been completely eliminated, and oil prices remain high. If energy supplies are further affected, rising oil prices could reignite global inflation expectations.
Rising energy prices could slow the decline in inflation and limit the Federal Reserve's room for interest rate cuts . As inflationary pressures may resurface, Fed officials may need to remain cautious on interest rate policy, which would provide some support for the dollar. Regarding monetary policy, Fed Chairman Kevin Warsh recently announced the formation of five working groups focusing on policy communication, balance sheet management, economic data quality, productivity and employment, and improving the inflation framework. This indicates that the Fed is still assessing the direction of future policy adjustments, and the market remains divided on the timing of interest rate cuts.
The market is currently focused on US economic data and subsequent speeches by Federal Reserve officials. If economic data continues to show a slowdown in growth, the dollar may face further pressure; however, if rising energy prices lead to a renewed surge in inflation expectations, the dollar may gain momentum for a short-term rebound.
From a daily chart perspective, the US dollar index has been declining recently, currently hovering around 100.60, indicating significant short-term bearish pressure. The daily moving average structure shows that the index has broken below some short-term moving average support, indicating weak market momentum. Support levels to watch are the psychological level of 100.00 and the 99.50 area; a break below these levels could lead to a further test of the 98.80 area. Resistance levels to watch are the 101.20 to 101.50 area; a successful retest of these levels could alleviate short-term downward pressure. The MACD indicator shows that bearish momentum still dominates, but a technical rebound should be anticipated near key support levels.
From a 4-hour chart perspective, the US dollar index remains in a downward channel, with short-term moving averages continuing to decline, indicating that sellers are currently in control. The RSI indicator is in weak territory, suggesting strong bearish sentiment in the market, but also implying a potential for short-term oversold correction. If the price fails to break below the 100.00 support level, a rebound to test the resistance around 101.00 is possible; however, a decisive break below this level could open up further downside potential.
Editor's Summary : The recent decline in the US dollar has been primarily driven by easing tensions between the US and Iran and reduced safe-haven demand. However, inflationary risks from rising energy prices continue to support the dollar. The market has not yet fully confirmed a shift in Federal Reserve policy, and interest rate expectations remain the core factor influencing the dollar's medium-term trajectory. In the short term, the dollar index may continue to be affected by changes in risk sentiment. If geopolitical tensions continue to ease while US economic data weakens, the dollar may continue to face pressure; however, if rising oil prices reignite inflation expectations and the Federal Reserve extends its high interest rate policy, the dollar may have a chance to rebound. Investors should pay close attention to inflation data, changes in the energy market, and policy signals from the Federal Reserve.
The recent weakening of the US dollar is mainly due to decreased demand for safe-haven assets. Previously, escalating tensions between the US and Iran drove funds to traditional safe-haven assets such as the US dollar, but recent news indicates signs of easing tensions. Market sources suggest that the US remains committed to advancing the previously reached understanding framework with Iran, and related technical communications are ongoing.
Although US President Trump had previously stated that the agreement was over, his recent revelation that Iran was seeking a deal has led the market to reassess the possibility of further escalation of the conflict. Signs of easing tensions between the US and Iran have weakened the safe-haven appeal of the US dollar , becoming a significant factor driving its continued decline.
Looking at the performance of major currencies, the US dollar weakened against most major currencies, with the Japanese yen showing relative strength, indicating that some safe-haven funds are flowing back into Asian currencies. Meanwhile, non-US dollar currencies such as the euro, pound sterling, and Australian dollar saw some rebound, reflecting an improvement in market risk appetite. However, the downward trend of the US dollar remains limited by changes in the energy market. Although there are signs of easing tensions in the Middle East, supply risks have not been completely eliminated, and oil prices remain high. If energy supplies are further affected, rising oil prices could reignite global inflation expectations.
Rising energy prices could slow the decline in inflation and limit the Federal Reserve's room for interest rate cuts . As inflationary pressures may resurface, Fed officials may need to remain cautious on interest rate policy, which would provide some support for the dollar. Regarding monetary policy, Fed Chairman Kevin Warsh recently announced the formation of five working groups focusing on policy communication, balance sheet management, economic data quality, productivity and employment, and improving the inflation framework. This indicates that the Fed is still assessing the direction of future policy adjustments, and the market remains divided on the timing of interest rate cuts.
The market is currently focused on US economic data and subsequent speeches by Federal Reserve officials. If economic data continues to show a slowdown in growth, the dollar may face further pressure; however, if rising energy prices lead to a renewed surge in inflation expectations, the dollar may gain momentum for a short-term rebound.
From a daily chart perspective, the US dollar index has been declining recently, currently hovering around 100.60, indicating significant short-term bearish pressure. The daily moving average structure shows that the index has broken below some short-term moving average support, indicating weak market momentum. Support levels to watch are the psychological level of 100.00 and the 99.50 area; a break below these levels could lead to a further test of the 98.80 area. Resistance levels to watch are the 101.20 to 101.50 area; a successful retest of these levels could alleviate short-term downward pressure. The MACD indicator shows that bearish momentum still dominates, but a technical rebound should be anticipated near key support levels.
From a 4-hour chart perspective, the US dollar index remains in a downward channel, with short-term moving averages continuing to decline, indicating that sellers are currently in control. The RSI indicator is in weak territory, suggesting strong bearish sentiment in the market, but also implying a potential for short-term oversold correction. If the price fails to break below the 100.00 support level, a rebound to test the resistance around 101.00 is possible; however, a decisive break below this level could open up further downside potential.
Editor's Summary : The recent decline in the US dollar has been primarily driven by easing tensions between the US and Iran and reduced safe-haven demand. However, inflationary risks from rising energy prices continue to support the dollar. The market has not yet fully confirmed a shift in Federal Reserve policy, and interest rate expectations remain the core factor influencing the dollar's medium-term trajectory. In the short term, the dollar index may continue to be affected by changes in risk sentiment. If geopolitical tensions continue to ease while US economic data weakens, the dollar may continue to face pressure; however, if rising oil prices reignite inflation expectations and the Federal Reserve extends its high interest rate policy, the dollar may have a chance to rebound. Investors should pay close attention to inflation data, changes in the energy market, and policy signals from the Federal Reserve.
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