The US Dollar's decline has slowed over the last few months and saw a bid following the flare up in geopolitical tensions.

The US Dollar has been a focal point of talking heads and analysts alike, for plenty of different reasons. It’s clear that the weakening USD has been a tailwind for international equities over the last year. While we’ll spare the chicken or egg discussion around whether international equities are doing well because of a declining USD or whether the USD is declining because international equities became more attractive, the US Dollar Index (DX/Y) is important to watch for any developments to get a clearer picture of the weight of the evidence.

DX/Y reversed up in early February after reaching a multi-year low in January and has continued to add Xs in this column after the start of the conflict in Iran. DX/Y is now facing a key resistance area built by old support along with new resistance. A break above 100 would mark the index’s highest level since June of last year with a move to 102 reclaiming old support that has turned into resistance. While there has been plenty of fuss about the US Dollar losing its reserve currency status, it has consolidated in its current range for nine months and reacted as a reserve currency would be expected to act following a major geopolitical event. At the same time, there is not much evidence that the USD will look to move much higher to change its current downward trend as it still trades on five consecutive sell signals. This still paints a positive backdrop for international assets until the downward pressure on the US Dollar eases but the gale like tailwinds experienced last year have calmed down to a nice breeze.