ING’s Chris Turner notes the Dollar has softened after comments on possible negotiations with Iran, but sees limited downside while the Strait of Hormuz remains shut and energy prices are elevated. He argues DXY has stalled near the top of its nine‑month range and expects the Dollar to stay in a 99.00–100.00 band absent fresh Middle East developments.

Dollar capped near recent range highs

"Iran has leverage with the Strait of Hormuz, however. For another big leg higher in risk assets to occur, we probably need to hear something positive from the Iranian side. News from the US that envoys are being sent for negotiations in Pakistan may not be enough to trigger another significant drop in the dollar."

"Beyond the inevitable set of Middle East headlines today, the US macro focus will be on the weekly ADP jobs report (any job losses yet?), and the provisional March PMI releases. It may be a little too early for the PMIs to come lower, but clearly an energy supply shock will inevitably take its toll on business sentiment."

"DXY has recently stalled at the top of the nine-month range near 100.25/50. We think its medium-term upside is limited unless energy prices make another major move higher or challenges emerge in financial plumbing, such as the cross-currency basis swaps moving wider (briefly seen yesterday) as banks use the FX swap market to secure dollar funding in wholesale markets."

"99.00-100.00 may be the near-term range until we see the next decisive chapter in this Middle East conflict."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)