A rising 20-day EMA supports a bullish US Dollar, which is expected to gradually push the Australian Dollar down toward 0.7000.

US Dollar Index Outlook: Bullish Momentum Supported by Climbing 20-Day EMA

• DXY Slips: The US Dollar Index pulled back to near 99.90.
• Geopolitical Driver: Optimism grew after President Trump stated that US-Iran negotiations are in their final stages, with a deal possible in two to three days.
• Next Catalyst: Market focus is shifting to the upcoming release of May’s US CPI data.

The US Dollar (USD) experienced mild downward pressure during Tuesday’s European trading session, sparked by renewed optimism surrounding a potential agreement between the United States and Iran. At the time of reporting, the US Dollar Index (DXY), which measures the Greenback’s performance against a basket of six major currencies, dipped 0.1% to hover around 99.90.

According to The Guardian, prospects for a US-Iran agreement have improved following remarks from President Donald Trump, who stated that negotiations are in their “final throes” and hinted that the critical Strait of Hormuz could reopen within days if a deal is finalized. This development is bearish for the US Dollar, which had previously rallied on the back of soaring energy prices caused by the strait’s closure. High energy costs had been driving US inflation and fueling hawkish expectations for the Federal Reserve.

Back home, the market is bracing for Wednesday’s release of the May Consumer Price Index (CPI) data. Headline inflation is projected to climb to 4.2% year-on-year, up from April’s 3.8%. Any signs of accelerating inflation will likely bolster expectations for Fed rate hikes, especially after last week’s robust Nonfarm Payrolls (NFP) report already intensified hawkish sentiment over the last two trading sessions.

DXY Technical Analysis

The US Dollar Index (DXY) spot is ticking slightly lower near 99.90. However, the short-term outlook remains bullish as the price holds above its 20-day exponential moving average (EMA) at approximately 99.30. This level sits well above the ascending trend-line support originating from the 95.55 region, which is currently tracking near 98.34.

Furthermore, the 14-day Relative Strength Index (RSI) is hovering in the low 60s, indicating healthy upward momentum without entering overbought territory. This supports a constructive outlook while the index consolidates just beneath the crucial 100 psychological level.

On the downside, immediate support rests at the 20-day EMA (99.30), followed by stronger support at the rising trend line near 98.34. A daily close beneath this lower threshold would damage the bullish setup and invite a deeper correction. Conversely, an upside break above the June 8 high of 100.20 could clear the way for the index to revisit its one-year peak at 100.64.

The Australian Dollar is projected to experience a measured decline, heading toward the 0.7000 mark against the US Dollar.

Daily Forecast (Next 24 Hours)

UOB analysts Quek Ser Leang and Lee Sue Ann expect the Australian Dollar to stabilize and trade within a 0.7015 to 0.7065 range today. While the currency briefly dipped to 0.7016 shortly after yesterday’s market open—approaching the projected 0.7020 support level—a subsequent recovery to 0.7078 has successfully mitigated immediate downward momentum.

Short-Term Outlook (1–3 Weeks)

The broader near-term bias remains tilted to the downside. Following a sharp sell-off last Friday that triggered building downward momentum, the analysts maintain that AUD/USD is on track to weaken toward 0.7000. This bearish outlook stays intact provided the currency does not break above the strong resistance level at 0.7105.

Long-Term Outlook (Multi-Month)

Looking further ahead, the structural risks for the pair point toward a gradual decline, with a major floor and significant technical support expected around 0.7040.