Risk appetite improves on US–Iran talks optimism, weighing on the dollar

The dollar weakened broadly at the start of the week, weighed down by improved risk sentiment as hopes increased for a potential US–Iran agreement to reopen the Strait of Hormuz and ease concerns over prolonged supply disruptions.

Although the dollar opened with a bearish gap and slipped to a 10-day low, price action remains contained within the near-term consolidation range of $98.79–$99.45. The upper boundary of the thinning daily Ichimoku cloud, reinforced by the daily Tenkan-sen at $98.80, continues to provide resistance and limit further downside pressure.

Overall, daily technical indicators remain broadly positive, with momentum still in bullish territory, suggesting that the current move may represent a consolidation phase or limited correction before the broader uptrend resumes.

This view is supported by the rapidly shifting headlines surrounding the peace talks, with remarks from President Trump indicating that optimism may be fragile and reversible. A breakdown in negotiations could quickly revive risk aversion and restore demand for the dollar as a safe-haven currency.

On the other hand, reduced liquidity due to the US market holiday has contributed to thinner trading conditions and more subdued price action, partially offsetting downside momentum.

From a bearish perspective, a clear break below the lower boundary of the recent range at $98.82 would be required to trigger an initial negative signal. Further confirmation would come with a sustained move below the key $98.50 area, which aligns with the daily Kijun-sen, the 50% retracement of the $97.44–$99.48 rally, and the daily cloud base.

Res: 99.04; 99.45; 99.75; 100.00; 100.26
Sup: 98.80; 98.50; 98.21; 97.92