USD Faces Uncertainty as US-Iran Conflict Sends Mixed Signals to Markets

The US dollar is trading in a tight range as markets struggle to find direction amid conflicting signals from the US-Iran geopolitical standoff. Risk sentiment has partially recovered from the sharp deterioration seen at the start of the week, but remains far from the optimism triggered when President Trump claimed "very productive" talks with Iran on Monday. Tehran officials have directly contradicted Washington's narrative, stating they are not engaged in direct or indirect contact with the US, leaving traders caught between competing headlines. Safe-haven flows into JPY and CHF have moderated but remain elevated compared to pre-conflict levels, while commodity-linked currencies like CAD remain sensitive to oil price fluctuations tied to Middle East tensions. The DXY is hovering near its weekly pivot with no clear directional bias. Key levels to watch include resistance at recent highs and support near the 50-day moving average. Traders should exercise caution and consider reducing position sizes, as any sudden escalation or breakthrough in negotiations could trigger sharp moves across USD pairs and oil-sensitive currencies.