The DXY is pushing higher but remains technically constrained below its downtrending 50-day moving average at 99.600. A continuation of short-covering could bring that level into focus, but given the broader downtrend, selling interest is likely to reemerge near this key resistance. A decisive break above it could signal a more aggressive bullish reversal, particularly if geopolitical risks intensify.
Recent gains in the dollar reflect renewed safe-haven flows as the Israel-Iran conflict escalates. However, the DXY remains down around 8% year-to-date, with confidence in U.S. trade and fiscal policy eroding under the pressure of tariff uncertainty and erratic policymaking.
Bank of England Decision Reinforces Greenback’s Strength
Across the Atlantic, the Bank of England held its benchmark rate at 4.25%, with a dovish 6-3 vote split indicating a potential cut as soon as August. While the pound briefly firmed on perceived clarity, the central bank flagged global uncertainty and soft domestic growth, reinforcing safe-haven flows toward the dollar. Rising energy prices and geopolitical risks further complicate the BoE’s rate path, with inflation still well above its 2% target.
Market Forecast: DXY Faces Key Test at 99.600
With limited U.S. data ahead and holiday-thinned trading, the DXY’s near-term fate hinges on price action around the 50-day MA at 99.600. Failure to break above could lead to renewed downside, particularly if global central banks continue to pivot dovish. However, escalating geopolitical tensions and continued Fed caution could sustain dollar strength in the short term. For now, traders should expect range-bound conditions with an upside bias until key resistance is tested.