Dollar Faces Downside Risk if Iran Talks Progress

If negotiations between the US and Iran continue and the Strait of Hormuz stays open, the biggest immediate effect is lower geopolitical risk. That usually reduces the safe-haven demand for the US dollar, which can keep the dollar capped or slightly weaker. Progress toward reopening the Strait of Hormuz and ending the conflict is generally negative to slightly bearish for the dollar in the short term, mainly because oil falls and safe-haven demand fades. But the move is likely limited unless the geopolitical situation fully stabilises.

Technically, USDX is trading around 98.00 after testing support near 97.40. If geopolitical tensions ease and 97.40 support is broken the next target zone is 96.30 - 95.80. On the upside, 200 DMA is acting as an immediate support and key resistance in 98.95.

USDX Daily Chart

EUR/USD remains supported after its strong early April rally, but sellers are testing the structure again. The pair recently bounced from 1.1742, and keeping 1.1713 intact is important to maintain the higher-low pattern. If price drops further, the next support sits near 1.1675 (200 DMA), followed by the 1.1627.

EUR/USD Daily Chart

GBP/USD continues to look relatively stronger on the bearish USD side compared with EUR/USD. The pair is holding support near 1.3480, a previous key swing high from March. Below this, the next support area is 1.3414.

While the recent swing high of 1.3590 is the resistance.

GBP/USD Daily Chart