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Dollar stays supported as Middle East escalation revives inflation fears

The dollar index remained inside roughly a $50 intraday range, while traders pointed to renewed inflation concerns and expectations for a longer hawkish Fed stance.

Reported · Written up by our desk · Major Pairs

The US dollar showed strength at the open on Monday, then reversed quickly, but it still stayed supported in the currency market, according to Action Forex. The Dollar Index remained within about a $50 range for the day, reflecting choppy trading rather than a clean trend move.

A fresh escalation in the Middle East boosted inflation-related worries, which in turn reinforced expectations that the Federal Reserve would maintain a hawkish stance for longer, the outlet said. Action Forex also cited news that large pension funds are returning to the dollar after last year’s migration, adding to support for the currency.

On the technical side, the analysis said the Dollar Index has been trending higher off its 2026 low at 95.35 within a broader bull-channel, even as daily price action has been confined to a narrower sideways range. The index was described as capped near a Fibonacci level at 100.94, with support around 100.32, leaving near term direction uncertain.

Action Forex added that momentum over the past 14 days has slipped into negative territory, keeping downside risk present even while the broader bullish structure holds. It said bulls are expected to remain in control if the price stays above trendline support at 100.29, with attention on 101.55 for a potential continuation signal.

Latest closeDollar index 101.28 ▲0.3%

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