The Dollar attempts a breakout amid US-Iran diplomatic exchanges – US Dollar Index (DXY) outlook

[Ben Graham]

• The US Dollar has been holding strong amid tariff chaos and (supposedly) advancing talks in Geneva with Iran – More on this coming soon
• FX Markets have been consolidating ahead of key geopolitics and are awaiting to take on a direction
• Dollar Index Technical Analysis ahead of Non-Farm Payrolls

The US Dollar really went on a run last week after having broken out of its early 2026 downward trend.

Markets have been looking for clarity, and clarity they could not find. Geopolitics seems to be advancing with the ongoing diplomatic exchanges in Geneva, which began in the mid-Swiss afternoon and should resume soon after a 3-hour break.

Except for a quick awakening in yesterday's session (and the Japanese Yen, often going onto its own adventures as of late), Forex Markets have remained desperately muted in the past weeks of action, with most Major pairs holding a 1,000 pip range – and that's being generous!

As uncertainty reigns, traders can find ranges to play around with tight stops, to remain active and see even more advantage in taking quick trades while waiting for bigger opportunities.

Even the Aussie Dollar, which sent another beat on its CPI earlier this week, couldn't find the momentum to extend its lead.

Everyone is looking at the same currency:

The US Dollar. What will happen to it, and what will be the outcomes of the US-Iran talks?

It seems that a breakout could be on the way with the Dollar bouncing right as I conclude this piece.

Markets will learn more soon, which should lead to significant breakouts across the board.

We’ll explore a few scenarios for upcoming breakouts in an in-depth technical analysis of DXY.

Discover:

• Tariffs and doubts – North American Mid-Week Market update
• Chart Alert: WTI crude oil bullish flag in play above $64.15 as US-Iran talk looms
• Markets Today: Nikkei clears 59000, Gold holds high ground, FTSE 100 prints fresh highs. US jobless claims up next

Dollar Index (DXY) Multi-Timeframe Analysis

Daily Chart

Dollar Index (DXY) Daily Chart. February 26, 2026 – Source: TradingView

The US Dollar has once again confirmed that its rangebound conditions precede above all trends and narratives in its latest February rebound.

It is now holding an upward trendline towards the mid-range resistance (98.00) which has been rejecting a few times.

It is still early to confirm, but remaining above its Mid-term Pivot (97.40) with an RSI above neutral adds further chances of an upside breakout – Look for a break above 98.00.

• The breakout will be contingent on heightened Middle East tensions remaining elevated
• Breaking the upward trendline (immediate support at 97.47) would allow for a correction lower
  • To confirm a downside reversal, wait for a close below the 97.40
    • A turn lower from here could lead to a later downside breakout in the Dollar Index – A small probability scenario for now.

4H Chart and Technical Levels

Dollar Index (DXY) 4H Chart. February 26, 2026 – Source: TradingView

The Dollar is bouncing back above its 4H 50 and 200-period Moving averages, prompting an immediate control from the bulls.

If the lead extends, expect the 98.00 key resistance to break amid multiple tests within an Rising Wedge (bullish) formation.

• In that event, look for trades expressing this view in other FX pairs (GBP/USD, NZD/USD, EUR/USD?)

Levels to place on your DXY charts:

Resistance Levels

• 98.00 Key Resistance (Immediate test)
• Mini-resistance 98.80 to 99.00 (next resistance)
• 99.40 to 99.50 January Resistance
• 100.376 November highs

Support Levels

• 4H 50 and 200-period MA 97.60
• Upward trendline 97.47
• 2025 Lows Major support 96.50 to 97.00 (mini-range lows, 4H 50-MA)
• Early 2022 Consolidation just below 96.00
• Trump USD Flash Crash 95.55
• 95.00 Main psychologic support

1H Chart

Dollar Index (DXY) 1H Chart. February 26, 2026 – Source: TradingView

The US Dollar is currently extending higher and will soon be facing the test of its resistance.

Traders would want to confirm a break above 98.00 in today's session to avoid an inevitable continued consolidation.

• 98.80 - 99.00 will be the next resistance

Safe Trades!

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