Key Points
- USDX traded at 97.866, down 0.003, or 0.00%, after reaching a session high of 97.911.
- The USDX dollar index traded steady near 98.017 after touching a two-month low of 97.625 on Wednesday.
- The US and Iran are working on a 14-point memorandum of understanding that could set up a month-long period of peace talks.
- Dollar pressure eased after President Donald Trump said the US had held “good talks” with Iran, but unresolved issues still keep safe-haven demand alive.
The dollar steadied on Thursday after slipping to a two-month low on Wednesday, as traders weighed fresh hopes for a US-Iran peace deal against the risk that talks could still fail. The USDX dollar index traded steady near 98.017 after reaching 97.625 when reports suggested a deal was within reach.
The chart shows USDX at 97.866, down 0.003, or 0.00%, at 05/07 09:57:39 GMT+3. The session high sits at 97.911, with a low at 97.744, an open at 97.884, and a close at 97.869.
The dollar’s pause makes sense. Peace hopes can weaken the dollar by reducing safe-haven demand and lowering oil-linked inflation pressure.
Yet traders are not ready to abandon the greenback fully while the final terms remain unsettled and Trump continues to warn that military action could resume if Iran fails to reach an agreement.
Iran Talks Keep The Dollar In A Tight Range
The US and Iran are working with mediators on a 14-point memorandum of understanding that would set out a framework for a month-long period of peace talks. The draft framework is aimed at ending hostilities and opening a path toward broader nuclear negotiations.
Trump said on Wednesday that the US had held “good talks” with Iranian negotiators and that Iran had agreed not to have a nuclear weapon. Even so, key issues remain unresolved. Trump also threatened to resume military action if Iran fails to reach an agreement.
That leaves the dollar in a two-way trade. A signed framework could pull USDX lower as oil falls, risk appetite improves, and traders reprice future Fed easing. A breakdown in talks could push the dollar higher as traders move back into defensive assets.
Fed Pricing Still Matters For USDX
The dollar is no longer moving only on Federal Reserve expectations. The Iran war, oil prices, and the Strait of Hormuz now sit at the centre of the macro trade. Still, Fed pricing remains important because lower oil and lower inflation risk could revive rate-cut expectations.
If peace talks make progress, traders may rebuild expectations for future easing. That would likely weigh on the dollar. If talks stall and oil rebounds, markets may keep the Fed on a firmer path for longer, which would support USDX.
This is why the dollar did not collapse after touching 97.625. Traders need more than hopeful headlines. They need proof that the peace framework can lower energy risk and keep inflation pressure contained.
Technical Analysis
USDX is trading near 97.87, remaining under pressure after failing to reclaim the 99.40–100.00 region, with price continuing to drift lower within a broader corrective structure. The dollar index has gradually weakened since peaking near 100.48 in late March, as rallies continue to face selling pressure.
From a technical standpoint, momentum remains bearish to neutral. Price is trading below the 5-day (98.07) and 10-day (98.22) moving averages, both of which are turning lower and acting as immediate resistance. The 20-day (98.18) is also sitting above current price, reinforcing the downside bias and signalling that buyers are struggling to regain momentum.
Key levels to watch:
- Support: 97.74 → 96.40 → 95.34
- Resistance: 98.07 → 98.22 → 99.40
Price is now hovering just above the 97.74 support zone, which has become the immediate line of defence for buyers. A break below this level could expose 96.40, with further downside risk toward the 95.34 low if bearish momentum accelerates.
On the upside, 98.07 is acting as the first resistance level, aligning with the short-term moving averages. A sustained move back above 98.20 would be needed to stabilise the structure, while a broader bullish reversal would likely require a reclaim of the 99.40 zone.
Overall, USDX remains in a soft corrective downtrend, with price trapped below key moving averages and struggling to build upside momentum. The market remains vulnerable to further downside while trading below the 98.20 resistance area.
Market Implications
A weaker dollar would support commodities, emerging-market currencies, and risk assets. Gold could regain support if USDX breaks lower and traders price more Fed easing. Copper and other growth-linked metals may also benefit if peace hopes improve global demand sentiment.
A firmer dollar would send the opposite signal. If Iran talks fail or oil rebounds, USDX could retest the 98.185 to 98.224 moving-average zone, while commodities and risk currencies may lose momentum.
The cautious forecast favours a soft but range-bound dollar while USDX holds below 98.224. A break below 97.744 would support a deeper move toward 96.414. A close above 98.224 would show that peace optimism is fading and that traders are rebuilding defensive dollar exposure.
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Trader Questions
Why Is The Dollar Index Steady Near 98?
The Dollar Index is steady near 98 because traders are balancing US-Iran peace hopes against the risk that talks could still fail.
USDX traded at 97.866, down 0.003, or 0.00%. The DXY dollar index traded near 98.017 after reaching a two-month low of 97.625 on Wednesday.
What Is Driving The US Dollar Today?
The US dollar is being driven by uncertainty around US-Iran peace talks, safe-haven demand, oil prices, and Federal Reserve rate expectations.
Peace hopes have reduced some demand for the dollar, but unresolved issues in the Iran talks are keeping traders cautious.
Why Did The Dollar Fall To A Two-Month Low?
The dollar fell to a two-month low after reports suggested a US-Iran peace deal was within reach.
The DXY dollar index touched 97.625 on Wednesday after Axios reported progress toward a peace agreement. The move showed that traders were pricing lower geopolitical risk, lower oil pressure, and a possible return of Fed rate-cut expectations.
What Is The US-Iran 14-Point Memorandum?
The US-Iran 14-point memorandum is a proposed framework for a month-long period of peace talks.
The Wall Street Journal reported that the US and Iran are working with mediators on the document. It would aim to create a path toward de-escalation, though key issues remain unresolved.
How Are US-Iran Peace Talks Affecting The Dollar?
US-Iran peace talks are affecting the dollar by changing demand for safe-haven assets.
If talks progress, the dollar could weaken as risk appetite improves and oil prices fall. If talks fail, traders may return to the dollar for safety, especially if military action resumes.
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