Dollar double bottom as oil tops $105, regional tensions rise

The U.S. dollar recovered much of its early-week losses and formed a double-bottom pattern on intraday charts as West Texas Intermediate crude climbed above $105. Reports said missiles struck U.S. Navy ships in Iranian waters and drones hit targets in the United Arab Emirates, prompting renewed market attention on the region.

The Dollar Index (DXY) moved back toward the midpoint of a 96.00 to 100.00 range that has held since July 2025. The 200-day moving average sits near 98.50. Four-hour charts show a double-bottom and a downside channel. Market participants noted that a sustained move above about 98.60 would point to 99.00 and possibly 99.50, while a slide below roughly 98.20 could leave the bear channel intact and open a test of 97.60.

Energy and currency flows showed closer correlation as oil returned above $105. Traders observed rising links between WTI and major FX pairs. Some analysts said a breach of $110 in crude could accelerate flows into the dollar and affect positions in EUR/USD and GBP/USD.

Semi-official reports indicated Iran launched missiles at U.S. Navy vessels in Iranian waters and carried out drone strikes on the UAE. U.S. military officials and Israel were reported to be coordinating possible limited responses. The reports followed a ceasefire that market participants had viewed as reducing near-term risk.

In remarks this week, the president of the New York Federal Reserve highlighted concerns about rising energy costs but did not change expectations for near-term policy moves among traders. The comments acknowledged upside pressure on inflation from energy without altering market bets on rate trajectories.

Traders continued to monitor headlines and price action. Key levels cited by analysts include resistance near 98.50 and 99.00, range highs around 100.00–100.50, and supports near 98.00 and the double-bottom zone between 97.40 and 97.70. The dollar has been rangebound since mid-2025, with moving averages flattening as markets absorbed intermittent shocks and macroeconomic data.