- The US dollar index is quoted by about 99.50 on Wednesday after erasing the previous profits of the Asian hours.
- Mixed PMI data and the lack of clarity on Trump’s tariff posture keep USD under pressure.
- The MACD prints a sales signal with resistance seen about 99.95 and 100.10; The support is located at 98.94.
The American dollar index (DXY) failed to maintain its initial force during Wednesday’s session and now slides near the 99.50 region, reflecting the continuous uncertainty around the US commercial policy and the weakening of the business impulse. The intradic rebound of the dollar to 100.00 during Asian trade faded rapidly after the comments of Treasury Secretary Scott Besent and the renewed scrutiny about the political position of President Donald Trump.
In economic data, the preliminary compound PMI of Global S&P for April fell to 51.2 from 53.5, suggesting a slowdown in general business activity. While the manufacturing PMI rose to 50.7, the PMI of Services fell to 51.4 from 54.4, highlighting the decrease in demand in the services sector. Chris Williamson of S&P Global said that the growth impulse is clearly weakening, while the inflationary pressure persists, which represents a challenge for the balance of the Federal Reserve (Fed).
Daily summary of market movements: the US dollar slides down behind the PMI data and tariff noise
- Besent reiterated that tariff negotiations are not imminent and will occur below the Trump-XI level, adding uncertainty.
- Despite a slight improvement in industrial production, the weakness of the services sector dragged the PMI compounded down up to 51.2.
- Standard Chartered analysts warned that tariff income would be well below what is necessary to finance the proposed tax cuts, which could add pressure to interest rates in the US.
- President Trump’s contradictory messages about tariffs – initially adopting a conciliatory tone before returning to ambiguity – have confused both merchants and investors.
- The S&P 500 Wall Street lost profits after Besent’s comments, while the USD cut losses with the DXY stabilizing around 99.50.
- Speaking on Wednesday, Besent clarified that President Trump has not offered unilaterally reducing tariffs on Chinese imports.
- However, he suggested that none of the parties consider the current levels of tariffs as viable in the long term, hinting at a possible mutual reduction.
- Meanwhile, Trump declared that he would be “kind” with China if the conversations resume, offering lower tariffs as an incentive. But the absence of a clear temporal framework for negotiations has left the markets in tension.
Technical analysis: DXY still limited below key averages
From a technical perspective, the American dollar index (DXY) maintains a bearish structure while there is about 99.56, registering a slight daily loss of 0.08%. The price action remains confined between 98.86 and 99.67, reflecting market indecision before the next macroeconomic data.
The impulse indicators are mixed. The relative force index (RSI) prints at 34.79, while the amazing oscillator in −3.45 is neutral. Meanwhile, the MACD remains in sale territory, reinforcing the downward bias in the short term. The rapid stochastic RSI (3, 3, 14, 14) in 38.59 does not offer a strong directional signal.
Trends monitoring indicators continue to press the USD. The 10 -day exponential (EMA) mobile average in 100.10 and the simple mobile average (SMA) in 99.95 now act as immediate resistance. Other barriers are found in 100.10 and 101.26. Down, the key support is located at 98.94. A rupture below this level could pave the way for a deeper fall to the middle zone of 97.00.
Although overall signs suggest a possible technical rebound, persistent political and fiscal concerns can limit DXY’s ability to set up a sustained recovery.
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.
