Oil<\/a> has fallen as traders price a lower probability of prolonged supply disruption, although the situation on the ground remains far from settled. Meanwhile, investors are returning to the dollar. DXY has pushed into and briefly above a major resistance zone, while USD\/JPY is approaching 162.<\/p>\n\n\n\n Yet US equities have not broken down. At least not yet.<\/p>\n\n\n\n The S&P 500 and Nasdaq remain within four-hour uptrends, while Micron and other semiconductor shares are climbing ahead of this week\u2019s earnings. Perhaps the market can remain resilient despite the stronger dollar and higher yields.<\/p>\n\n\n\n The New York market open will provide the first meaningful test.<\/p>\n\n\n\n This is where much of the current confusion begins.<\/p>\n\n\n\n Early headlines focused heavily on Iranian negotiators walking out of the meeting, creating the impression that talks had broken down completely. However, the walkout was a temporary protest rather than Iran\u2019s definitive withdrawal from the negotiations.<\/strong><\/p>\n\n\n\n Discussions continued through Qatari and Pakistani mediators, and Iranian officials remained involved in technical talks. Foreign Minister Abbas Araghchi said the first round had made major progress,<\/strong> while Qatar and Pakistan announced a roadmap aimed at reaching a final agreement within 60 days.<\/p>\n\n\n\n The Strait of Hormuz is also not completely sealed.<\/strong> Iran has declared it closed and commercial traffic has fallen sharply, but selected vessels have continued to pass. It is therefore more accurate to describe the strait as politically closed and heavily restricted, rather than physically closed to every ship.<\/p>\n\n\n\n The negotiations suffered a serious interruption, but did not collapse. Markets are responding to the possibility of a wider agreement and reduced disruption, although both the talks and shipping situation remain fragile.<\/p>\n\n\n\n DXY has pushed into and briefly above the 100.15 to 100.88 resistance zone<\/a>, supported by higher US yields, resilient economic activity and a more hawkish Federal Reserve.<\/p>\n\n\n\n The immediate question is whether DXY can confirm the breakout with a daily close above 100.88.<\/p>\n\n\n\n A confirmed close above that level would strengthen the bullish structure and bring the May 2025 high near 102 back into focus.<\/p>\n\n\n\n However, the dollar is no longer moving through open space.<\/p>\n\n\n\n DXY is testing established resistance while its daily Relative Strength Index<\/a> approaches 70. That shows strong momentum, but it also means the move is becoming increasingly stretched.<\/p>\n\n\n\n This is central to the equity outlook.<\/p>\n\n\n\n A rising dollar can:<\/p>\n\n\n\n But Wall Street may not need the dollar to reverse sharply.<\/p>\n\n\n\n It may only need DXY to stop accelerating.<\/p>\n\n\n\n If the index falls back below 100.88 or begins consolidating around the resistance zone, the additional pressure on equities may remain manageable.<\/p>\n\n\n\n A clean breakout towards 102 would create a more difficult backdrop, particularly if Treasury yields continue rising alongside it.<\/p>\n\n\n\n USD\/JPY provides further confirmation of broad dollar demand. The pair is approaching the 161.96 to 162.00 area, with the yen already trading near its weakest level against the dollar in almost four decades.<\/p>\n\n\n\n A sustained break above 162 would place the yen at a fresh multi-decade low and further increase the possibility of Japanese intervention.<\/p>\n\n\n\n Higher yields can pressure equities, especially technology stocks, but the relationship is not automatic.<\/p>\n\n\n\n Stocks can still rise when yields increase because the economy remains resilient, earnings are growing and recession risk is falling. In that environment, higher yields partly reflect stronger growth rather than an inflation shock.<\/p>\n\n\n\n The two-year Treasury yield is near 4.23%, while the ten-year remains around 4.50%. Markets appear willing to tolerate those levels for now. The risk is that yields rise because inflation is accelerating and investors begin pricing several Fed increases.<\/p>\n\n\n\n Thursday\u2019s PCE report will help show whether the move reflects healthy growth or renewed inflation pressure.<\/p>\n\n\n\n The latest price action remains technically constructive, although the US open will show whether the recovery has enough demand behind it to continue.<\/p>\n\n\n\n Both the S&P 500 and Nasdaq declined during Friday\u2019s shortened futures trading before recovering through the Asian session and extending higher during London trading.<\/p>\n\n\n\n The S&P 500 remains in a four-hour uptrend after rebounding from its 4H-200 exponential moving average<\/a> last Wednesday.<\/p>\n\n\n\n Key levels include:<\/p>\n\n\n\n A clean breakout above 7,540 would strengthen the case for another test of the highs.<\/p>\n\n\n\n A rejection would not immediately break the uptrend, provided the index continues holding above its immediate support region.<\/p>\n\n\n\n The Nasdaq remains technically stronger. It rebounded from its 4H-50 EMA, and previous all time highs at 29,590, rather than requiring another test of the 200 EMA. Price has since recovered towards the 78.6% Fibonacci retracement<\/a> near 30,426.<\/p>\n\n\n\n The main levels are:<\/p>\n\n\n\nIs the Strait of Hormuz Open or Closed?<\/strong><\/h2>\n\n\n\n
Dollar Strength Reaches a Decision Point<\/strong><\/h2>\n\n\n\n
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Why Higher Yields May Not Stop Stocks Rising<\/strong><\/h2>\n\n\n\n
US Indices Remain in Four-Hour Uptrends<\/strong><\/h2>\n\n\n\n
S&P 500<\/strong><\/h3>\n\n\n\n
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Nasdaq<\/strong><\/h3>\n\n\n\n
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