US Dollar Index (DXY) clings to gains near 102.30, April 2025 high amid geopolitical risks

• DXY gains strong positive traction on Monday amid persistent geopolitical uncertainties.
• Bulls seem unaffected by receding October Fed hike bets and retreating US bond yields.
• Traders now look to US ISM Services PMI and Fed speeches for short-term opportunities.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, catches aggressive bids following Friday's dismal US jobs data-led downtick and jumps to a fresh high since April 2025 at the start of a new week. The index sticks to strong intraday gains through the early European session and currently trades near the 102.30 region, up around 0.35% for the day.

The closely watched US Nonfarm Payrolls (NFP) report showed that the economy added only 29K jobs in September and the Unemployment Rate unexpectedly edged higher to 4.2%. Moreover, soft wage growth tempered expectations for an October Federal Reserve (Fed) rate hike, which dragged US bond yields away from multi-year highs. The immediate reaction, however, turned out to be short-lived, with a combination of supporting factors assisting the DXY to regain strong positive traction at the start of a new week.

According to the CME Group's FedWatch Tool, traders are still pricing in over an 85% chance that the US central bank will raise borrowing costs by the end of this year. Furthermore, persistent geopolitical uncertainties stemming from Middle East conflicts and the widening Russia-Ukraine war turn out to be another factor providing an additional boost to the safe-haven Greenback. In fact, Iran’s Foreign Minister, Abbas Araghchi, said that there is no military solution to the conflict with the US, but Tehran remains ready to return to war.

Adding to this, Iranian parliament speaker Mohammad Bagher Ghalibaf said that the Strait of Hormuz will not be opened until our conditions are met. Meanwhile, the head of Yemen’s governing body, Rashad al-Alimi, announced the start of military operations to retake the remaining territory held by the Houthis in the country. Separately, Ukraine reported deadly Russian air strikes on the Kyiv region, Kharkiv, and Dnipro on Sunday. Moreover, Ukrainian President Volodymyr Zelenskyy vowed that Russia will definitely face a response to this.

The aforementioned fundamental backdrop suggests that the path of least resistance for the DXY remains to the upside. Bulls, however, might opt to move to the sidelines and await the release of FOMC meeting Minutes on Wednesday for more cues about the future policy path before placing fresh bets. In the meantime, the US ISM Services PMI, due later today, along with speeches from influential FOMC members and further developments surrounding the Middle East crisis, will be looked upon to grab short-term opportunities.

DXY daily chart

Technical Analysis

Last week's breakout above the 101.60-101.70 horizontal barrier was seen as a fresh trigger for DXY bulls. Meanwhile, the Relative Strength Index (14) sits in overbought territory above 70, suggesting the latest leg higher is stretched but still dominated by buyers for now. Any corrective pullback, however, is more likely to attract fresh buyers and remain limited near the aforementioned resistance breakpoint.

(The technical analysis of this story was written with the help of an AI tool. Know more.)