The US dollar falls after the increase in the Taiwan dollar amid the panic of exporters

• The US dollar falls in Monday’s operations.
• The TWD shoots more than 5% in a very illegid market while the Central Bank of Taiwan celebrates an emergency press conference.
• The US dollar index remains below 100.00 and is still trapped in a waiting range.

The US dollar index (DXY), which tracks the performance of the US dollar (USD) compared to six main currencies, lowers and is maintained below the level of 100.00 at the time of writing this item on Monday, after the Taiwan dollar (TWD) shoots more than 5% and triggers a spill effect on Asian currencies against the dollar. It is the greatest intradic gain in more than three decades, in speculation that exporters are hurrying to convert their US dollar holdings to the island’s coin, according to Bloomberg. All this occurs in a very illiquid market with several Asian countries, such as China and the United Kingdom, closed for a holiday.

The movement opens an interesting element in tariff conversations that are being carried out between the United States (USA) and Taiwan. One of the reasons why exporters are buying Taiwanese dollars is that they expect the authorities to allow the currency to be appreciated to help reach a commercial agreement with the USA. The Taiwan government said on Saturday that its negotiation team had held the first round of meetings with the US on May 1, although details were not published.

What moves the market today: many factors in motion again

• On Sunday, the president of the USA, Donald Trump, suggested that his administration could close commercial agreements with some countries as soon as this week, offering the perspective of relief for commercial partners who seek to avoid higher import tariffs of the US, Reuters reported.
• The European Union is ready to propose measures to prohibit Russian gas imports by the end of 2027, since the block seeks to break ties with the country that was once its largest energy supplier, reports Bloomberg.
• Japan’s Minister of Finance, Katsunobu Kato, said the country will not use the sale of its US Treasury bond holdings in commercial conversations with the Trump administration, retracting previous statements last week, says Bloomberg.
• At 13:45 GMT, the final reading of the PMI of S&P Global April services will be published. A stable reading of 51.4 is expected.
• At 14:00 GMT, the Supply Management Institute (ISM) will publish its April PMI for the service sector:
• • The holder of the PMI of Services is expected to fall to 50.6, coming from 50.8 in March.
  • The index of new service orders was 50.4 and the service employment index in 46.2 in March, without forecasts available for April.
• The actions are everywhere while several countries in Asia remain closed for a holiday. European indices rise around 0.50% in the day. The US futures seem to be under pressure with the Nasdaq lowering about 1%.
• The CME Fedwatch tool shows that the probability of an interest rate cut by the Federal Reserve at the May meeting is 3.2% compared to a 96.8% probability that there are no changes. The June meeting sees a probability of 31.8% of a rate cut.
• The yields of 10 years from the US are traded around 4.31%, deleting the weakening of the previous weeks, since the operators have even discounted the possibilities of a rate cut in June.

Technical analysis of the US dollar index: external pressure

The US dollar index (DXY) is moving due to a series of spill effects and dominoes of the Taiwan dollar. Although it is not part of the index, other currencies of the Asian region continue, with the Japanese yen (JPY), which represents 13.6% of the DXY, currently quoting almost 1% stronger against the dollar. A side effect of the Trump administration demands, urging exporting countries to appreciate their currency as one of the demands to avoid tariffs, is felt. In turn, this revaluation weakens the dollar, and this was only Taiwan.

Upwards, the first resistance of the DXY is found in 100.22, which supported the DXY in September 2024, with a break 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-hombro (H&S) 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