Yesterday, markets rallied on the ceasefire extension. S&P futures rose 0.4%. Oil pulled back. The dollar gave back some of its recent gains.
But here is what the market is still missing: The ceasefire was extended, but the Strait of Hormuz is still closed, and the US naval blockade remains in place.
Iran immediately responded that it did not request an extension and called the US move a ploy to buy time for a surprise attack. The core issue—energy flow—is completely unresolved.
For the dollar, this is not a trend change. It is a pause.
My Dollar (DXY) Trade Plan
My bias: Bullish on DXY as long as the Strait stays closed.
Why: The safe-haven bid for USD has not disappeared. It is waiting for the next headline. If the Strait remains closed, oil stays near $100, inflation fears persist, the Fed stays hawkish, and the dollar finds support. The market is no longer pricing in a quick resolution. Analysts at Citi warn that if the Strait stays blocked through June, oil could hit $130, which would force the Fed to keep rates high – supporting the dollar.
The entry zone:
I am not chasing DXY here. I want to buy a pullback into the support zone between 97.817 and 97.605.
Why this zone:
97.00 was resistance in late March. Now it should act as support. The recent rally from 95.50 to 100.50 was driven by panic. I want to enter after the panic fades, not during it.
Stop loss:
Below 97.50. If DXY breaks 97.50, my bullish thesis is wrong, and the market is pricing in a real resolution.
Take profit 1:
99.00 – the pre-ceasefire high.
Take profit 2:
100.00 – psychological round number and a key level from February.
Time horizon:
I am holding this trade for 1 to 3 weeks, not days. The Strait will not reopen overnight.
What Could Invalidate My Trade
If the Strait reopens partially or fully, oil crashes, the Fed cuts rates, and the dollar resumes its downtrend. I will exit immediately.
If the US and Iran announce formal talks with a clear timeline, the safe-haven bid for USD will fade. I will reduce position size.
If DXY closes below 97.50 on daily timeframe, I will take the loss and move on.
One Chart I Am Watching
Bottom Line
The ceasefire is noise. The Strait is signal. I am buying DXY on a pullback to 97.80–98.10, with a stop below 97.50 and targets at 99.20 and 100.00. I will hold for 1 to 3 weeks unless the Strait reopens.
Disclaimer: This article is for informational and educational purposes only. It does not constitute financial advice, trading recommendations, or an offer to buy or sell any asset. The author is an active trader and shares personal insights, not financial guidance. Any trades, entry levels, stop losses, or take profit targets mentioned are the author’s personal views and may not be suitable for your specific financial situation. Always do your own research and consult a licensed financial advisor before making trading decisions. Past performance does not guarantee future results. Trading forex, commodities, and indices carries significant risk and may not be suitable for all investors.
