- The US dollar operates positively while operators digest the recent negative manufacturing survey of Dallas Fed.
- The Trump administration leaves aside the negotiation attempt with China to focus first on other countries.
- The US dollar index remains limited below the round level of 100.00, quoting about 99.40 on Tuesday.
He US dollar index (DXY), which tracks the performance of the US dollar (USD) compared to six main currencies, is seeing a small rebound and quotes 99.35 at the time of writing on Tuesday. The dust is still settling after the Federal Reserve of Dallas (FED) published the manufacturing feeling index of April on Monday. In addition to the fact that the number contracted at -35.8, a number not seen from the Covid pandemic, the real report mentioned the comments of the participants.
The participants expressed their current feeling with words such as “chaos” and “insanity”, to describe the agitation caused by the tariffs of US President Donald Trump. That gives an idea of how things are falling apart in the US under the current tariff schemes. US yields also fall while operators bet on greater possibilities that the Fed cuts interest rates sooner rather than later, if the next US economic data this week, with the gross domestic product (GDP) preliminary of the first quarter and non -agricultural names (NFP) of April, are as disastrous as the manufacturing impression of the fed of the fed of the fed of the fed of the fed of the fed of the fed of the fed.
In the front of the economic calendar, there are some lighter data ahead on Tuesday, with the central theme in the March Jolts employment offers report. Although this is retrospective, before American tariffs were implemented, it could already give a feeling if US companies were preparing for an impact and reduced their hiring activity. In addition to that, the US preliminary property balance is also expected for March.
Daily summary of market movements: volatility is ready to reach its maximum point again
- At 12:30 GMT, the US preliminary goods will be published for the US for March. There is no prognosis available with the previous deficit at 147,000 million dollars.
- Preliminary wholesale inventories are expected to also be published at the same time, with an increase of 0.7% from the 0.3% increase in February.
- At 1:00 GMT, the February housing price index will be published. A 0.3% increase from 0.2% in February is expected.
- At 14:00 GMT, the March Jolts Employment Offers report is expected to contract even more to 7.5 million, coming from 7,568 million before. April consumer confidence will also be published, although there is no prognosis available.
- The actions are stable with very small profits to be reported in general, on average below 0.5% for both European indices and for US futures markets.
- The CME Fedwatch tool shows that the probability of an interest rate cut by the Federal Reserve at the May meeting is 8.9% compared to a 91.1% probability that there are no changes. The June meeting sees a 62.6% probability of a rate cut.
- The yields of 10 years of the US are traded around 4.23%, lowering a little while the operators slowly but surely buy American bonds again.
Technical analysis of the US dollar index: without movement but something is brewing
The American dollar index (DXY) does not move, since the operators maintain dry gunpowder for the key economic data of the United States later this week. Meanwhile, some geopolitical headlines on the reduction of tariffs are counteracted by headlines of China or other countries in response to the Trump administration. By observing US data, the Dallas Fed manufacturing survey could be the first real sign that the US economic performance will begin to deteriorate, asking for rapid cuts of interest rates by the Fedand a weaker US dollar before US economic numbers recover again.
On the positive side, the first resistance of the DXY is found in 100.22, which supported the DXY in September 2024, with a return above the round level of 100.00 as a bullish signal. A firm recovery would be a return to 101.90, which acted as a key level throughout December 2023 and again as a basis for the formation of inverted shoulder-hombre during the summer of 2024.
On the other hand, the support of 97.73 could be quickly tested before any substantial bearish holder. Below, a relatively thin technical support is located at 96.94 before looking at the lowest levels of this new price range. These would be 95.25 and 94.56, which would mean new minimums not seen since 2022.
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.
