• The US Dollar bulls are struggling to extend their recovery above 99.00.
• Growing geopolitical tensions have provided some support to the safe-haven USDS.
• The DXY is forming an expanding wedge, which might be anticipating a bearish outcome

The US Dollar (USD) shows marginal gains on Monday, with risk appetite fading as tensions in the Middle East escalate and oil prices rise. The US Dollar Index (DXY), however, keeps trading in the lower range of the last two weeks’ trading band, with price action struggling to find acceptance above 99.00 ahead of a string of key US macroeconomic releases.

Fresh skirmishes between the US and Iran have increased concerns about a fragile ceasefire, while US President Donald Trump is still considering signing a memorandum of understanding that would extend the ceasefire for another  60 days. Furthermore, Israel has ramped up its operations in Lebanon, adding pressure to an already strained truce.

On the macroeconomic front, the US has a busy calendar ahead, starting with the ISM Manufacturing Purchasing Managers’ Index (PMI) report, due later today. These figures will frame a slew of employment releases due later in the week, which will have their climax at Friday´s Nonfarm Payrolls report, and that are likely to provide further insight into the US Federal Reserve’s (Fed) monetary policy.

Technical Analysis: DXY is forming an expanding wedge

The Dollar Index trades at 98.97, holding a modest bearish bias with recent price action showing an expanding wedge. This figure reveals an unusually emotional market, and often acts as a top formation.

Momentum studies in 4-hour charts lean soft, with the Relative Strength Index (RSI) around 45, after failure to pop up above the 50 midline, and the Moving Average Convergence Divergence (MACD) fractionally negative, which suggests upside attempts are likely to struggle.

Upside attempts remain capped below session highs at $99.08, which so far is closing the path towards the May 29 high in the area of 99.20, and the May 28 high, right above 99.50. On the downside, a break of the wedge's bottom, now at 98.80, would expose the May 5 and 13 highs right below 98.60 ahead of the May 8 and 11 lows, in the 97.85 area.

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