- The US dollar index falls below 100.40 after rejection nearly a month.
- The conversations between the US and China in Switzerland dominate the holders of the weekend.
- Fed officials emphasize stable inflation expectations in the midst of economic uncertainty.
The American dollar index (DXY), which measures the value of the US dollar compared to a foreign exchange basket, was abruptly invested on Friday after reaching a maximum of a month of 100.86 earlier in the day. The disappointment around the so -called commercial agreement between the US and the United Kingdom weighed strongly over the dollar, with investors focused on criticism of commercial negotiations between the United States and China in Switzerland this weekend.
Daily summary of market movements: the US dollar weakens before key conversations
- The commercial agreement between the US and the United Kingdom is being discarded by the markets as non -substantive, with US tariffs on the assets of the United Kingdom being held at 10%.
- The market approach moves to commercial conversations between the US and China this weekend, where discussions are expected to be tense and unfinished.
- President Trump hinted that tariffs on Chinese goods could fall to 50% if cooperation improves, although skepticism prevails.
- Chinese refineries imported 11.7 million barrels per day in April, with the collection driven by the lowest prices of crude oil.
- The US places Chinese independent refineries in the list of sanctions for buying Iranian oil, increasing the pressure before commercial conversations.
- The president of the Bank of the Federal Reserve of New York, John Williams, emphasized the importance of maintaining stable long -term inflation expectations.
- The governor of the Fed, Adriana Kugler, stressed that the current policy rate is moderately restrictive, suggesting that it will remain unchanged.
- Commerzbank analysts warn that high Chinese crude imports are unlikely to sustain themselves as US sanctions harden even more.
- Those responsible for the Fed emphasized that the economy remains healthy, but warned about possible downward risks due to elevated tariffs.
- Despite a short -term increase, the US dollar index faces sales pressure as risks of persistent tariffs arise.
- The market now expects concrete results of the next Fed policy movements and possible inflation developments.
- It is expected that US sanctions against Chinese refineries weigh on China’s energy sector, which could impact commercial conversations.
- Iranian oil imports of China remain high at 1.5 million barrels per day, but could decrease after US sanctions.
- Investors remain cautious, keeping an eye attentive to the risks of holders and the weekend developments of the meetings between China and the US.
Technical analysis of the American dollar index: DXY Test Support
The American dollar index (DXY) is negotiated around the level of 100.00, lowering more than 0.30% in the day, after having previously tried maximums close to 100.86. Both the Relative Force Index (RSI) in 46 and the ultimate oscillator in 59 show a neutral impulse, while the convergence-discovery of the mobile mean (MACD) emits a purchase signal. The average directional index in 44 remains neutral, indicating that there is no strong trend bias.
Short -term buyers are backed by the single mobile average (SMA) of 20 days in 99.64, but long -term resistance remains firm with the 100 -day SMA in 105.11 and the 200 -day SMA in 104.31 pointing to a continuous sales pressure. The immediate support is located at 100.28, 100.24 and 99.97, while the resistance is observed at 100.73, 100.80 and 100.86.
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.
