- The US dollar index (DXY) is traded near the 98.50 zone after a strong fall during Monday’s session.
- Concerns increase after Trump criticizes Powell, generating fear about the independence of Fed and further damaging the feeling towards the USD.
- The technical indicators show a sustained bearish impulse with resistance observed around 98.65 and 100.38.
The US dollar index (DXY) deeply quotes in red on Monday, sliding towards the 98.50 region and marking a new minimum of three years. The sharp fall follows the growing market concerns about the institutional integrity of the Federal Reserve (FED) after the US president Donald Trump again criticized the president of the FED, Jerome Powell, and confirmed that he is exploring ways to dismiss him. Trump accused Powell of manipulating interest rates for political purposes in 2024 and described him as “too late” in reacting to economic conditions.
In the midst of the growing global uncertainty and the deterioration of confidence in the US monetary leadership, the gold shot out a new historical maximum about $ 3,425 per ounce, benefiting from the demand for safe refuge and a dollar in collapse. The broader feeling is still a verso of the risk, with the operators reevaluating the long -term reserve status of the dollar in the midst of unpredictable commercial and fiscal policies.
What moves the market today: Fed threats shake the markets
- The explosive gold rally above $ 3,400 underlines the rush for safe refuge assets as the fears of political interference in the US increase.
- The repeated attacks of President Trump to the president of the FED, Powell – along with reports that his administration is examining legal ways to dismiss it – have shaken the confidence of investors.
- The fall of the DXY to the 98.00 zone reflects the restlessness of the market before a potentially politicized central bank. The comments of the White House Advisor, Kevin Hasset, and Trump’s publications in Truth Social have only deepened the perception of a hostile position towards monetary independence.
- Scotiabank analysts warn that undermining Fed could weaken credibility in the fight against inflation, which could raise inflation expectations and further press the USD.
Technical analysis
The technical background for the DXY is still strongly bassist. The pair quotes around 98.50, near the bottom of the daily range (97.92–99.21), showing a strong negative bias. The Relative Force Index (RSI) has fallen to 24.22, entering deeply overence, while the MACD continues to print a sales signal.
The bearish feeling is confirmed by the position of the key mobile socks: the simple mobile average (SMA) of 20 days in 102.26, the 100 -day in 106.04, and the 200 -day in 104.63 – all in the downward trend. The 10 -day EMA in 100.38 and the SMA in 100.69 further reinforce resistance above the current levels.
The key resistance levels are observed at 98.65, followed by 100.38 and 100.69. While some short -term oscillators such as the ultimate oscillator (37.76) and the amazing oscillator (−3.54) seem neutral, the dominant structure remains clearly negative.
Unless political clarity is restored or the feeling of risk changes, the DXY seems to be prepared for more falls.
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.
