Dollar Retreats as Oil Jumps Ahead of FOMC Week

April 27, 2026 — The U.S. dollar eased from last week’s highs even as West Texas Intermediate crude rose roughly 4% to about $97 a barrel. Market participants positioned for the Federal Reserve’s policy week and a Bank of Japan meeting tonight while the historical correlation between oil and the dollar weakened.

FX markets showed a divergence between energy and the greenback that had held since late February, when the dollar typically rose alongside crude. WTI’s move toward $97 did not produce corresponding dollar strength. The U.S. Dollar Index (DXY) slipped after gaining about 1% the previous week. Some analysts said flows could realign if oil rises above $100 per barrel.

Reports circulated about a potential Iranian reopening of the Strait of Hormuz conditioned on a U.S. end to a blockade; talks have not produced concrete results. Sources described Iran’s positions as maintaining demands that include preserving regional proxy forces and pressing for a permanent withdrawal of U.S. bases. Market participants attributed elevated risk premia in energy prices to the unresolved negotiations.

Technical factors affected the dollar’s price action. The dollar opened higher at the start of the week but sellers stepped in and erased that gap, pushing the DXY lower during the session. On a daily basis the index traded inside a consolidation band between about 98.00 and 99.40 while testing its 200-day moving average.

Shorter-term charts showed the weekly gap stalled around the four-hour 200-period moving average near 99.25, then finding support near the four-hour 50-period moving average at roughly 98.36. Traders identified near-term resistance in the 99.25 to 99.50 area and a larger ceiling between 100.00 and 100.50, with a historical double-top near 100.54.

Support levels were cited near 98.36 and 98.00, with additional floors in the 97.40–97.60 zone and 96.50–97.00. Early-2022 consolidation levels below 96.00 were noted as further downside reference points if selling accelerates.

Market participants said FOMC communications this week would be examined for guidance on policy direction, including whether officials signal that interest rates will remain elevated or indicate easing inflation pressures partly related to energy costs. The Bank of Japan’s meeting tonight was flagged as a potential source of volatility for dollar-yen flows and broader FX positioning.

Analysts described the current pause in the dollar’s upswing as consolidation and advised patience before taking continuation trades. With central bank meetings and geopolitical developments pending, traders indicated they would remain reactive to headlines and incoming data in the near term.