- The American dollar index saw a volatile action near the 99 area in Monday’s session, bouncing from a new minimum of three years.
- Uncertainty about tariffs, the fall in consumer confidence and high inflation expectations continue to weigh on feeling.
- The technical signals remain bassists, with the limited price below the key resistance in the 101.80–102.20 zone.
The American dollar index (DXY) recovered slightly in the American session on Monday after falling to its lowest point since 2022. Trusting around 99.60, the index tried to stabilize while investors reacted to signals of increased risks of stagning. The rebound occurred despite the new sale pressure of the US dollar (USD) that had led to the EUR/USD and the GBP/USD to maximum of several months earlier in the day. While the market saw some relief after the exempted exemptions about the reciprocal tariffs of the US, concerns about inflation, consumer’s feeling and global commercial friction continued to dominate the panorama. Technically, the downward pressure remains intact.
Daily summary of market movements: the US dollar bounces from a minimum of three years
- On Friday, consumer confidence fell dramatically, with the index of the University of Michigan sinking to 50.8 in April, failing in the forecasts and marking the lowest level since June 2022.
- Inflation expectations at 12 months increased to 6.7%, the highest level in years, complicating the federal reserve policy perspective.
- China imposed new 125% retaliation tariffs on US imports after the US escalation last week; Business confidence is expected to suffer.
- The pound and the euro initially fired, but both the EUR/USD and the USD/USD returned profits as the dollar showed signs of stabilization towards the closing of the session.
- The US trade officials confirmed new exemptions on electronic imports of reciprocal tariffs, temporarily calming the fears of recession but increasing the uncertainty of politics.
Technical analysis
The DXY is still technically fragile despite a slight rebound on Monday. The convergence/divergence indicator of mobile socks (MACD) continues to generate a sales signal, while the relative force index (RSI) is located in 24.60 – neutral but approaching overall conditions. The price action remained below all the main mobile socks, including the 20 -day SMA in 103.13, the 100 -day SMA in 106.34, and the 200 -day SMA in 104.74. Short -term indicators such as the 10 -day exponential mobile average in 101.83 and the 10 -day SMA in 102.23 also maintain a downward slope. The resistance is seen in 99.88, followed by the key levels of 101.83 and 102.23. The perspective remains bassist while the index cannot recover those areas.
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.
