- The US dollar index records a gain of more than 1% after the announcement of a 90 -day tariff truce between China and the USA.
- The Fed, through Kugler, says that evaluating the economy is still difficult in commercial changes and collection of households.
- The 10 -year Treasury bond performance of the US is fired to 4.45%, supporting USD through the expansion of rates differentials.
- Markets discard Fed fees cuts by 2025 as the appetite for risk is fired globally.
The American dollar index (DXY), which measures the value of the US dollar in front of a foreign exchange basket, shot at a maximum of a month on Monday after China and the United States announced a 90 -day break in their commercial war. Both countries agreed to temporarily reduce tariffs, with the US lowering taxes on Chinese assets to 30% from 145% and China reducing tariffs on US goods to 10% from 125%.
This impulse to the appetite for the risk sent the American dollar upwards, especially in front of traditional safe shelters such as Japanese Yen and the Swiss Franco, since investors bet on a possible long -term commercial agreement.
Daily summary of market movements: The next approach to Ukraine
- The secretary of the US Treasury, Scott Besent, confirmed the 90 -day tariff reduction agreement with China, relieving the immediate fears of the commercial war.
- President Trump hinted more conversations with Chinese President Xi Jinping later this week, keeping hope alive.
- Adriana Kugler of the Federal Reserve warned that sustained tariffs would change the global supply chains and complicate economic forecasts.
- The reference performance of the 10 -year Treasury bonds from the USA.
- The rates markets have completely ruled out the federal reserve fees for 2025, strengthening the dollar further.
- The EUR and the GBP fell sharply compared to the USD, lowering 1.5% and 1%, respectively, in the midst of increased yields in the US.
- The currency JPY and ChF refuge had a lower performance, losing almost 2% against USD due to the strong feeling of risk.
- Those responsible for the Fed expect rates to remain unchanged at 4.25% -4.50% during June and July, delaying feat cuts until September.
- The market sees a 51.2% probability of the first fed cut in September, with expected rates at 3.75% -4.00% by the end of 2025.
- Gold prices fell more than $ 100 per ounce, testing the minimum of May about $ 3,200 as the demand for safe refuge weakens.
- WTI crude oil extended its recovery around $ 75,00 per barrel, supported by the best global growth prospects.
- The copper remains stable, quoting near the midpoint of its recent range despite the improvement in the feeling of risk.
- The US economic calendar is light, with the focus by changing to the consumer price index (CPI) on Tuesday and Thursday’s retail sales.
- The president of the FED, Jerome Powell, is scheduled to speak Thursday, which could provide more clues about the trajectory of the Central Bank’s policy.
- Market participants now direct their attention to geopolitical developments in Ukraine and the Middle East.
Technical analysis of the US dollar index: The graph shows bull signals for the DXY
The US dollar index (DXY) is showing a bullish signal, quoting around 102.00 with daily profits of approximately 1.00%. The index is currently in the average range between a strong support in 100.50 and a key resistance about 102.00.
The relative force index (RSI) remains in the 50s, indicating neutral conditions, while the MACD shows a purchase signal, indicating a positive impulse. The Bull Bear Power about 2.00 and the stochastic k k in the 80s confirm a neutral feeling to Alcista, along with a reading of the product channel index of 270.
The short -term mobile socks favor buyers, with the simple mobile average (SMA) of 20 days and both the 10 -day exponential mobile average (EMA) and the SMA grouped around the level of 100.00. However, SMA of 100 days and 200 days in the long term continue to suggest caution. The immediate support is found in 100.91, 100.88 and 100.73, while the resistance is observed in 101.96, 102.08 and 103.43.
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.
