- The markets are digesting the recent ads about copper tariffs and negotiations between Russia and Ukraine.
- The president of the USA, Trump, mentioned that copper tariffs will arrive before anticipated.
- The US dollar index sees support in 104.00 and is consolidating this Wednesday before the orders for the US durable goods.
The American dollar index (DXY), which tracks the performance of the US dollar (USD) compared to six main currencies, is currently bouncing at the level of 104.00 and is consolidated on Wednesday before the data of orders for the US durable goods for February.
On the one hand, the DXY faces some sale pressure due to a high fire agreement in the black sea by the United States (USA), where Ukraine is willing to commit and Russia goes back and demands the lifting of all sanctions to banks and agricultural companies.
On the other hand, the purchase pressure comes from the comments of the president of the United States, Donald Trump, who said that copper tariffs will arrive in a couple of weeks, long before what the markets anticipated.
As for economic data, all eyes are placed in the orders of lasting goods in February. Expectations are already quite pessimistic, with a 1% contraction for the forecast number compared to the 3.2% increase in the previous month. In the Federal Reserve Front (Fed), the president of the FED of Minneapolis, Neel Kashkari, and the president of the Fed of St. Louis, Alberto Musalem, are scheduled to speak later this Wednesday.
Daily summary of market movements: lasting goods will mark the tone
- At 11:00 GMT, the Association of Mortgage Banners (MBA) published the weekly number of mortgage applications. This week’s number was -2% compared to the previous contraction of 6.2%.
- At 12:30 GMT, the data for the orders for lasting goods in February will be published:
- The general orders are expected to be -1%, a substantial fall compared to the previous 3.2%.
- Durable goods excluding transport is expected to rise to 0.2% from 0.0% in the previous month.
- Around 14:00 GMT, the president of the Bank of the Federal Reserve of Minneapolis, Neel Kashkari, will be the host of an event of Fed Listers and conversation at the Economic Summit of the Regional Chamber of Commerce of Detroit Lakes, Minnesota.
- Just 10 minutes after Kashkari, the president of the Fed of St. Louis, Alberto Musalem, will speak at the Economic Development Lunch of the Paducah/Greater Paducah Commerce.
- The shares are not breaking any records this Wednesday, with minimal profits in Asia and minor losses in Europe and in the US futures.
- According to the CME Fedwatch tool, the probability that interest rates are maintained in the current range of 4.25%-4.50%at the May meeting is 88.4%. For June, the chances that indebted costs are lower are 65.6%.
- The 10 -year performance of the US is negotiated around 4.31%, with bond operators seeking direction in these compensatory events in Ukraine and US tariffs.
Technical analysis of the US dollar index: thrust and pull
The US dollar index (DXY) consolidates this Wednesday. Technically, support in 104.00 is good for a rebound, while concerns about tariffs and the impact on US economy are supporting the fortress of the US dollar. On the contrary, the ongoing conversations for a peace agreement between Russia and Ukraine mean that a sigh of relief could extend through the markets, weighing on the US dollar.
With the weekly closure above 104.00 last week, a great impulse towards the round level of 105.00 could still occur, with the simple mobile average (SMA) of 200 days converging at that point and reinforcing this area as a strong resistance in 104.96. Once that area is broken, a series of key levels, such as 105.53 and 105.89, could limit the bullish impulse.
Down, the round level of 104.00 is the first close support after a successful rebound on Tuesday. If that is not maintained, the DXY runs the risk of falling back to that range of March between 104.00 and 103.00. Once the lower end in 103.00 yields, you have to be attentive to 101.90 at the bottom.
US dollar index: daily graphics
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
