The US dollar index continues to fluctuate at high levels, caution against a pullback near resistance levels

Forex.com News — On Tuesday during the Asian session, the U.S. Dollar Index rose to around 100.10, continuing the recent rebound trend. The current dollar trend is mainly driven by safe-haven demand and interest rate expectations, maintaining relative strength amid a complex macroeconomic backdrop.

From the market’s core drivers, ongoing tensions in the Middle East have continued to become an important catalyst for the dollar’s strength. Risks around the Strait of Hormuz are still unfolding, and U.S. President Donald Trump has explicitly said the current ceasefire proposal is “still not enough,” threatening further action. This uncertainty significantly boosts global safe-haven sentiment, prompting funds to flow into the dollar and thereby supporting the upward movement of the Dollar Index.

Meanwhile, inflation pressures brought by rising oil prices are once again affecting monetary policy expectations. As energy prices rise, concerns about inflation stickiness intensify. Federal Reserve officials said that if inflation stays at high levels, the possibility of further tightening can’t be ruled out. This statement strengthens market expectations that “high interest rates will stay in place for longer,” becoming an important supporting factor for the dollar.

However, on economic data, some softness signals have been released. According to data released by the Institute for Supply Management, the March services PMI fell to 54.0, below both the prior figure and market expectations, indicating that the expansion momentum in the services sector has weakened somewhat. To a certain extent, this data limits the dollar’s upside potential, but the overall impact is limited.

The market is currently waiting for U.S. durable goods orders and ADP employment data, and these figures will provide new guidance for near-term trends. In an environment dominated by geopolitical risk, the marginal impact of data may be weaker than risk sentiment itself.

From a technical perspective, on the daily level, the Dollar Index has stabilized above the 100 integer threshold, and the short-term trend has turned stronger. The prior pullback low formed a phase of support; the price has moved back above key moving averages, indicating that bullish momentum has resumed. The current key resistance level is 101.00, with further resistance at 102.00. Downside support is at 99.50, with further support at 98.80. Momentum indicators show that upside momentum is gradually strengthening. On the 4-hour level, the Dollar Index is showing an oscillating upward structure, with highs and lows gradually moving higher. Short-cycle moving averages remain in a bullish arrangement, and the RSI is operating in the mid-to-high range, indicating a bullish bias in the short term. If 101.00 is broken, the uptrend will be further confirmed; if 99.50 is broken to the downside, it could enter a correction phase.

Editor’s summary:

The current core drivers of the Dollar Index come from “geopolitical risk aversion + interest rate expectations.” The Middle East situation increases safe-haven demand, and combined with inflation pressures stemming from rising oil prices, the market is reassessing the Fed’s policy path, thereby supporting the dollar’s strength. Although some economic data is soft, its impact is limited amid risk sentiment dominance. In the short term, the Dollar Index may continue to see a range-bound but bullish trend; the subsequent direction will depend on further changes in the geopolitical situation and economic data.

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Responsible editor: Guo Jian