The US Dollar Index extends its recovery to 99.85 from Friday’s lows at 99.41. Waning hopes for a rapid peace agreement in Iran, coupled with assertive remarks from Federal Reserve officials, have given a renewed impetus to the USD. Bulls must surpass the 100.00 threshold to validate a more substantial correction. The US Dollar Index appreciates for the second consecutive day on Tuesday, supported by a combination of concerns regarding the stalled US-Iran negotiations and hawkish comments from the Federal Reserve, which sustain expectations for a September rate hike. The DXY, which measures the value of the US Dollar against a basket of six majors, is currently trading at 99.85 as the US session approaches, with the significant 100.00 level within close reach.

Investors are concentrating their attention this week on the upcoming US Consumer Prices Index report scheduled for Wednesday. This report is anticipated to provide further insights into the trajectory of the Federal Reserve’s interest rates and influence the short-term movement of US Dollar pairs. Analysts contend that the threshold for a significant alteration in Federal Reserve expectations is high, emphasising that “core CPI would need to print at 0.3% MoM or higher in July, above the 0.2% consensus forecast, to materially lift expectations of a September rate hike.”

In their view, a “rangebound USD, combined with a constructive risk backdrop, should continue to support carry trades despite ongoing volatility in oil markets. Nevertheless, OCBC experts caution that Iran’s firm conditions for Washington suggest any near-term boost to energy supply is likely to be limited.” The Dollar Index Spot is currently trading at 99.86, nearing the 100.00 threshold, which serves as the neckline of a Double Top pattern situated just above 99.40.

Momentum indicators on the 4-hour chart are transitioning into bullish territory, as the Relative Strength Index (14) rises above the 50 level and the Moving Average Convergence Divergence moves slightly above zero, tho still not indicating a definitive trend shift. Bulls must surpass 100.00 to indicate a more substantial correction, potentially reaching the late July peaks at 100.45 or beyond. On the downside, immediate support is at the noted 99.40 area, corresponding to the lows observed on August 2 and 7. Further down, the June 4,5 lows, near 99.15, emerge as the subsequent target.