Forex
Dollar Rebound Faces Overbought Risks Despite Geopolitical Tensions
The dollar's rebound faces overbought risks despite geopolitical tensions and falling crude oil prices. The DXY, which tracks the US dollar against a basket of currencies, is testing its lower boundary from 2026.
A breakout above 100.50 would put the DXY back within its 2026 uptrend, targeting 101.00 and 101.80 before confirming new yearly highs. However, daily momentum is becoming overbought, similar to readings observed near previous yearly highs.
The Bank of Japan's guidance remains divergent from hawkish Fed expectations, which could continue to support the dollar against the yen unless broad-based dollar weakness emerges.