Achieving peace in the Middle East, or some stable variant of it, is putting pressure on the US dollar, which was previously supported by demand as a safe-haven currency. Against this backdrop, analysts warn of a temporary decline in the US dollar in the Forex market. Still, it is unlikely to be systemic once speculators have priced in this development.

From a technical standpoint, the US dollar index is trading above a strong support level at 98.90. Only a break below that level amid continued news of a peace agreement between the US and Iran could lead to a limited decline.

Technical view and trading idea

The price is below the middle line of the Bollinger Bands and below the 5- and 14-period SMAs, which have crossed, confirming the strength of the downtrend. The RSI is below 50%. The Stochastics have entered oversold territory.

We expect a decline only after the 98.90 level is breached. A potential sell target could be 98.86.