USD outlook: Geopolitical risks and policy shifts shape dollar dynamics

The US Dollar Index (DXY) hovers near 105.50 as markets assess implications of potential US policy adventurism on the greenback's global standing. EUR/USD trades cautiously around 1.0420 amid diverging central bank outlooks and geopolitical uncertainties. Rising crude oil prices, with WTI above $74 per barrel, add inflationary pressure that could support dollar strength through hawkish Fed expectations. However, concerns about US fiscal policies and international relations create medium-term headwinds for the currency. Technical analysis shows DXY facing resistance at 106.00, while support holds at 105.00. The dollar's safe-haven appeal remains intact despite policy uncertainties, though sustained geopolitical tensions could trigger volatility. Traders monitor upcoming FOMC minutes and US economic data for clearer policy signals affecting dollar positioning across major pairs.