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The US Dollar Index (DXY) remains resilient near 99.00 as geopolitical tensions between the US and Iran intensify, driving risk-averse positioning. The index has gained 0.4% this week, reflecting investors' flight to safety amid heightened uncertainty. The dollar's strength is supported by reduced expectations of aggressive Fed rate cuts and a weaker USDT/USD cross amid sanctions-related volatility.
A stronger dollar typically pressures emerging market currencies and commodities priced in USD, which could impact Gulf investors with exposure to oil and regional equities. Traders are closely monitoring Iran's response to recent US military actions and potential sanctions, which could trigger further dollar buying. Central bank policy divergence and energy market dynamics will also shape the dollar's trajectory in the coming weeks.
The key resistance for DXY lies at 99.50, with a break above this level likely to extend gains toward 100.00. Conversely, a pullback below 98.50 could signal waning momentum. Investors should watch the Fed's inflation data releases and OPEC+ production decisions for potential catalysts in the near term.
