- The US dollar index slides near 99.33 as doubts grow on the tariff reductions led by the United States.
- China denies current trade negotiations; Changes in US commercial policy are considered long -term destabilizers.
- The technical indicators are inclined downward, with resistance levels at 99.43, 99.53 and 99.80.
The US dollar (USD) weakens slightly on Monday while the markets start an occupied week, overshadowed by skepticism around the United States commercial policy (USA). While US officials hinted in progress with Asian partners and “daily conversations” with China, Beijing reiterated that it is not involved in negotiations, emphasizing the lack of winners in a tariff war. This background left the US dollar index (DXY) by modestly downward, around the 99.33 mark at the time of writing.
The optimism that US commercial policies could eventually reduce global tariffs is increasingly seen as wrong. Standard Chartered analysts point out that multilateralism continues to weaken under the Trump administration, with the World Trade Organization (WTO) on the margin and free trade agreements (FTA) facing long and uncertain negotiation deadlines. Adding to the pressure, the risk of prolonged uncertainty could weigh strongly on the perspectives of global growth.
What moves the market today: quiet markets
- American officials maintain that tariff discussions with Asian nations continue, but China denies any active commercial negotiation.
- Standard Chartered warns that the hopes of lower global tariffs are unrealistic; WTO mechanisms are still on the sidelines.
- Chinese electronic retailers Temu and Shein increase prices by up to 300% for US consumers, highlighting tariff costs.
- Meanwhile, the markets are prepared for US crucial data later this week, including the reading of the GDP of the first quarter and the Non -Agricultural Payroll (NFP) report of April.
- Investors will be attentive to these launches in search of signals on whether the Federal Reserve (FED) could proceed with a possible rate cut at their May 7 meeting.
Technical analysis: DXY trapped below 100.00 while sellers press the key support
The American dollar index (DXY) is still under bearish pressure, around 99.33 after falling 0.25% in the day. While the relative force index (RSI) in 35.28 remains neutral, the convergence/divergence indicator of mobile socks (MacD) emits a sales signal, confirming the underlying bearish tone.
Short and long term mobile socks reinforce the downward trend. The 10 -day exponential (EMA) mobile average at 99.80 and the simple mobile average (SMA) of 10 days in 99.43 indicate sale, aligning with the Smas of 20, 100 and 200 days in 101.06, 105.70 and 104.51, respectively.
The resistance is observed in 99.43, 99.53 and 99.80. If the DXY breaks below its immediate support zone of 99.08, it could quickly test the lower area of 98.00. Without a significant positive catalyst, upward attempts will probably face a strong sales pressure before crucial economic data later this week.
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.
