Dollar Plunges On Fresh Iran Peace Hopes
Dollar Down Heavily
The US Dollar has turned sharply lower at the start of the week as traders react to news that Iran has submitted a new peace proposal to the US. The proposal which included terms to reopen the Strait of Hormuz ha been welcomed by markets with risk assets higher across the European morning and USD seeing reduced safe-haven outflows. However, with oil prices remaining elevated, downside is likely to be limited unless we hear more progress on the peace front. News that the US looks likely to accept Iran’s proposal should fuel a further rally in risk assets, pushing USD down deeper near-term. On the other hand, if the US turns down Iran’s proposal and negotiations falter again, this could spark a fresh move higher in USD near-term.
FOMC On Wednesday
Looking ahead this week, traders will also be watching the Fed on Wednesday where USD risks appear skewed to the upside. High inflation and residual strength in oil prices mean that hawkish risks remain a clear factor for traders to be wary of at the moment. If the Fed is seen voicing greater concern over inflationary risks and the need for rates to stay higher for longer, this should keep USD underpinned. However, developments with the US/Iran peace process will remain the bigger focus.
Technical Views
After gapping higher at the open, DXY has reversed heavily, breaking back below 99.15 and now testing support at 98.24. If we push lower here, the retest of the broken bear trend line will be the next support to watch ahead of the deeper level at 96.63.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.