Market confidence in a US-Iran agreement pressures the USD, offsetting Fed rate hike expectations as the DXY trades marginally higher.
The US Dollar Index (DXY) edged up to 99.25 in early European trading Friday, despite optimism over a potential US-Iran deal. Reports indicate a final draft agreement, mediated by Pakistan, could be announced within hours, easing geopolitical tensions.
The DXY remains above its 20-period Exponential Moving Average (98.79), sustaining a near-term recovery. Traders anticipate the Federal Reserve will maintain current rates but deliver at least one hike this year, supporting the dollar.
Sticking points in negotiations include Iran’s uranium enrichment and control over the Strait of Hormuz, which the US has called non-negotiable. The deal’s provisions include a ceasefire and guaranteed Gulf navigation freedom.