US-Iran Tensions Fuel Rebound in Crude Oil Prices and DXY
The ongoing tensions between the US and Iran have caused a rebound in crude oil prices, as well as the US Dollar Index (DXY), which has maintained its bullish structure above $70 per barrel. This uptrend is attributed to persistent geopolitical risks surrounding the Strait of Hormuz, including future navigation and transit arrangements. These unresolved issues are hindering a durable ceasefire and the full resumption of shipping flows through the strait.
WTI crude oil's latest pullback found support near $72, corresponding with the 78.6% Fibonacci retracement of July's advance. The price action continues to hold above the $70, $72 support zone, maintaining the geopolitical risk premium embedded in oil prices.
The USD/JPY pair has also rebounded from its pullback, finding support near 155.00 and aligning with the 38.2% Fibonacci retracement of the April 2025, July 2026 advance. A sustained break above 164.00 would expose the upper boundary of the broader channel near 170.
Markets continue to price geopolitical uncertainty, elevated Treasury yields, and expectations for a more hawkish Federal Reserve as the dominant macro narrative. The broad outlook continues to favor a bullish bias unless a durable framework governing Middle East shipping routes is established, US Treasury yields begin to decline, and expectations for further Federal Reserve tightening continue to fade.