The US dollar is modestly misleading, but uncertainty looms over long -term perspectives

  • The US dollar index is negotiated near the 100 zone on Tuesday after bouncing from a minimum of several years.
  • Analysts are still skeptical about any lasting recovery amid the growing distrust of erratic commercial policies.
  • The technical indicators still suggest downward risk unless the DXY overcomes resistance in the range of 101.50–101.80.

The US dollar (USD) gains limited land on Tuesday while the US dollar index (DXY) rises back to the 100 region during negotiation hours in North America. The index bounced since its recent minimum of three years amid overall conditions, but the feeling is still fragile. Although the dollar has registered profits against important peers such as the euro, the markets remain cautious due to the continuous uncertainty around the changes in the tariff policy of US President Donald Trump. The operators are also digging mixed comments of the Federal Reserve (Fed) and weak economic data, all developing during the volatile session on Tuesday.

Daily summary of market movements: the US dollar bounces from deep minimums

  • The DXY bounced to the 100 zone after falling to a minimum of three years about 99.00, with profits mainly driven by technical correction and overall conditions.
  • Market participants are still convinced by the recovery of the USD in the midst of uncertainty caused by sudden changes in commercial policy, including temporary pauses and new exemptions for some imported goods.
  • Analysts pointed out that repeated reversals in the application of tariffs are undermining confidence in the structural attraction of the US dollar, especially since China remains excluded from recent exemptions.
  • In the Policies Front, the governor of the FED, Christopher Waller, expressed his support for interest rate cuts if recession risks increase, even when inflation expectations remain high.
  • The survey data continues to paint a fragile panorama, with the consumer’s feeling index of the University of Michigan falling to 50.8 and the expectations of inflation to one year rising to 6.7% – levels not seen since mid -2022.

Technical analysis

The American dollar index remains in a technically fragile state despite its slight rebound. The Relative Force Index (RSI) is currently at 29.82, pointing out a possible reversal from the overall territory. However, the indicator of convergence/divergence of mobile socks (MACD) still prints a sales signal, suggesting that the broader bearish trend remains intact. Key mobile socks reinforce the decrease: the single mobile (SMA) average (SMA) is located in 102.97, with the 100 -day in 106.26 and the 200 -day in 104.71 – All with descending slope. The exponential mobile (EMA) and 10 -day SMA – both grouped around the region of 101.50–101.80 – represent the next important resistance zone. The initial support is located at 99.21. A break would be needed above 101.80 to change the short -term impulse. Until then, the inclination is still down.

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

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