Dollar Higher on Iran News

The US Dollar is attempting to break higher today as news of fresh military exchanges between the US and Iran fuel renewed safe-haven demand. Traders are increasingly wary that the ceasefire could collapse, leading to a return to full war. These latest attacks come just days after initial exchanges reported on Monday and highlight rising tensions over the ongoing failure by both sides to agree a peace deal. Trump has remained optimistic this week signalling that negotiations are continuing and a deal is close, but news of fresh military attacks is obscuring any optimism traders were displaying with USD and oil rising and risk assets coming under pressure.

US Data On Watch

Looking ahead today, focus will also be on a slew of incoming US data with core PCE, weekly jobless claims, durable goods and prelim q/q GDP all due. Pricing for a Fed rate hike by year end is currently around the 55% level. Any data strength in today’s releases, particularly core PCE and prelim GDP should see that pricing creeping up to around the 60% level, offering USD further support. On the other hand, any undershooting in either of those key readings should help cap the USD rally for now while traders await fresh headlines on the US/Iran peace process. Near-term, USD risks look skewed towards further upside given the risk of stronger data and continued uncertainty over the Middle East.

Technical Views

DXY

The index is back above the 99.15 level today and is now probing last week’s highs around 99.50. With momentum studies bullish, focus is on a continuation higher with the 100.36-level the next target for bulls. To the downside, 98.24 will be the key support to watch.