- The American dollar index is completely recovered and deletes the Asian fall seen on Monday.
- The brief euphoria fades rapidly before the delay of US tariffs on EU’s assets.
- The US dollar index is plain again at $ 99.10.
The US dollar index (DXY), which tracks the value of the dollar value against six main currencies, is maintained by the middle of the European negotiation session in 99.10. The drop in the dollar occurred after the president of the United States (USA), Donald Trump, agreed to extend the deadline of 50% tariffs on the EU until July 9, instead of June 1, when they were supposed to enter into force. In general, a sigh of relief travels through the markets, with risk assets emerging as the biggest winners in these developments at the beginning of the week.
Several operators and analysts continue to point out persistent problems that remain stagnant. President Trump’s tax bill is on the way to being voted in the Senate, and add additional pressure on US debt with a deficit that continues to increase, the yields could continue to rise, with the operators demanding a higher premium to buy US debt.
What moves the market today: holiday in the US means low volumes
- The speculative operators remained bassists over the US dollar, but reduced their positioning at $ 12.4 billion in the week that ended on May 20, from 16,500 million dollars in the previous week, according to data from the CFTC reported on Friday, reports Reuters.
- Trump announced that the deadline for the European Union (EU) in front of 50%tariffs would extend until July 9. The decision occurred after a call between Trump and the president of the European Commission, Ursula von der Leyen, on Sunday, and should help the EU negotiate a commercial agreement with the Trump administration, Bloomberg reports.
- The US economic calendar is almost empty on Monday due to the fallen day holiday in the US later this week, the second reading of the Gross Domestic Product of the US of the first quarter is expected on Thursday. The data index data on personal consumption for April will be published on Friday.
- The actions are rising in a brief sigh of relief for the delay of US tariffs. European actions are increasing more than 1%, along with the US futures.
- The Fedwatch of the CME tool shows that the possibilities of an interest rate cut by the Federal Reserve at the June meeting are only 5.6%. Later, at the July 30 meeting, the chances of rates are lower than current levels are 23.9%.
- The yields of 10 years of the US will not move this Monday since US markets remain closed due to the Fallen Day holiday.
Technical analysis of the US dollar index: it is never a straight line
The American dollar index is recovered from the minimum daily on Monday, with some adventurous bullish entering to buy the fall, which materialized in the first Asian operations. With the relative force index (RSI) beginning to break below 40 and approaching the overall barrier, a slowdown and even a change in the DXY could occur. However, recovery could be ephemeral, since several macroeconomic problems have not yet been solved.
Upwards, the level of 100.22, which kept the DXY in September-October, is the first resistance, followed by the ascending tendency line broken about 100.80 on Monday. Above, the simple mobile average (SMA) of 55 days in 101.39 is the next level to take into account, followed by 101.90, a crucial level throughout December 2023 and a base for the formation of head and shoulders inverted (H&S) during the summer of 2024. In case the US dollar bundles push the even higher DXY, the crucial level of 103.18 will enter into play.
If the downward pressure continues, an abrupt movement towards the minimum of the year of 97.91 and the crucial level of 97.73 could materialize. 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
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
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.
