- The US dollar index is falling for the second consecutive day and proves the 100.00 mark while the impact of the Moody’s reduction on US debt persists.
- The markets are seeing the stable image of the US damaged after Trump said that the US could move away forever from peace conversations between Russia and Ukraine.
- The US dollar index could fall below 100.00, revising the minimum of 2022.
The American dollar index (DXY), which tracks the performance of the US dollar (USD) compared to six main currencies, is falling lower for the second consecutive day on Tuesday, since the markets continue to digest the recent reduction of the rating of the US debt, which led to a roller mountain in the US bond markets.
Outside the US, geopolitical tensions are increasing again. France, the United Kingdom and Canada are considering sanctions against Israel if the country does not stop its land offensive in Gaza and allows the entry of food supplies to the strip. The Israeli prime minister, Benjamin Netanyahu, responded by saying that Israel has the right to defend himself.
As for the war between Russia and Ukraine, EU leaders condemned the withdrawal of the president of the United States (US), Donald Trump, after his two -hour call with the Russian president, Vladimir Putin. Despite the bold statements that an agreement would be achieved in a matter of days after becoming president and that a peace agreement would not be possible without the US, President Trump said that US would withdraw from any future conversation by stating “it is not our war to deal with it,” Bloomberg said. The collapse adds to the loss of credibility, affecting the value of the US dollar.
In a relatively quiet week in terms of economic data, operators prepare for more comments from Federal Reserve (FED) officials on Tuesday, after the mostly hawk tone seen among many of them on Monday.
What moves the market today: total failure
- The markets are degrading the US dollar even more, since President Trump seems to not be able to resolve the debacle between Ukraine and Russia. After the two -hour call with Russian President Putin, President Trump said the conversations between the EU, Russia and Ukraine would begin, without any military support or related to sanctions to accelerate the peace process, Bloomberg reports.
- An army of speakers of the Fed is ready on a Tuesday other dry in terms of US economic data:
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- At 13:00 GMT, the president of the Richmond Federal Reserve Bank, Thomas Barkin, talks about growth in rural communities at the Rural Investment Conference in Roanoke, Virginia.
- At 17:00 GMT, the president of the Fed of St. Louis, Alberto Musalem, speaks at the Minnesota Economic Club event on the Campus of the University of Minnesota.
- Around 21:00 GMT, the governor of the Federal Reserve Bank, Adriana Kugler, pronounces a graduation speech at the Berkeley 2025 economy graduation ceremony.
- At 23:00 GMT, the president of the Bank of the Federal Reserve of Atlanta, Raphael Bostic, speaks in a panel with other presidents of reserve banks at the 2025 Financial Market Conference of the Atlanta Fed in Florida.
- At the same time, the president of the Bank of the Federal Reserve of San Francisco, Mary C. Daly, and the president of the Bank of the Federal Reserve of Cleveland, Beth M. Hammack, participate in a moderate question and answers session.
- The shares are mixed on Tuesday, with European actions, rising slightly after the German Dax reached another historical maximum. American actions face a certain decline on Tuesday.
- The CME Fedwatch tool shows that the possibility of an interest rate cut by the Federal Reserve at the June meeting is only 8.6%. Later, the decision of July 30 is likely that the rates are lower than the current levels in 33.1%.
- The yields of 10 years from the US are traded around 4.43%, cooling after the strong recovery seen Monday.
Technical analysis of the US dollar index: damaged image
The American dollar index is losing something more of its brightness on Tuesday. After the issue of solvency and its safe refuge status due to the reduction of credit rating, the fact that President Trump could move away from any additional attempt to end the war between Russia and Ukraine can be perceived as another element of lack of confidence. The fact that the Trump administration could change or even reverse in any matter will remain in the feeling of the operators when considering how to deal with the US dollar.
On the positive side, 101.90 is the first great resistance again, since it already acted as a pivotal level throughout December 2023 and as a basis for the formation of inverted head and shoulders (H&S) during the summer of 2024. The simple mobile average (SMA) of 55 days in 101.94 reinforces this area as a strong resistance. In the event that the dollar bulls push the even higher DXY, the pivotal level of 103.18 comes into play.
As for the supports, the ascending trend line and the support level in 100.22 are under pressure and could be broken at any time if more sales pressure arises. A minced movement could materialize around the year of 97.91 and the pivotal level of 97.73. Below, a relatively thin technical support appears 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.
