- The US dollar index slipped below 100.40 after declining close to a high month.
- Us-China talks with Switzerland are huge weekend titles.
- Fed officials emphasize the stable expectation of inflation amidst economic uncertainty.
The US Dollar Index (DXY), which measures the value of the US dollar against a basket of currencies, reversed greatly on Friday after hitting a close one month high of 100.86 earlier in the day. The frustration surrounding the so-called US-UK trade deal is weight in greenback, along with investors dedicated to critical trade negotiations over the weekend between the United States and China in Switzerland.
Daily -Sales Digest Market Movers: US dollar softens ahead of basic conversations
- The US-UK trade deal is written by markets as non-substantive, along with US tariffs on UK goods remaining 10%.
- Market focus changes in US-China trade talks this weekend, where discussions are expected to be tense and not disturbing.
- President Trump has announced that tariffs on Chinese goods can fall by 50% if cooperation improves, even if the doubt prevails.
- Chinese refineries imported 11.7 million barrels per day in April, with a stock of lower crude oil prices.
- The US places independent Chinese refineries in the list of penalties for Iran's purchase of oil, increasing pressure before trade communication.
- The President of the Federal Reserve Bank of New York John Williams emphasized the importance of maintaining a stable long-term inflation.
- Fed Governor Adriana Kugler is highlighting the current policy rate as moderate restriction, suggesting that it remains unchanged.
- Commerzbank analysts are warning that high Chinese crude imports are not likely to be maintained while the US penalties are still tight.
- Fed policies emphasized that the economy remains healthy but warns possible risks from elevated tariffs.
- Despite a short -term increase, the US dollar index faces pressure sale as stagflation risks emerged from ongoing tariffs.
- The market is currently awaiting concrete outcomes from the next Fed policy and potential inflation development.
- The US punishment against Chinese refineries is expected to weigh in the China's energy sector, which potentially affects trade communication.
- Iran oil imports from China remain high in 1.5 million barrels per day but may decrease following US penalties.
- Investors remain cautious, observing headline risks and weekend developments from China-US meetings.
US Dollar Index Technical Analysis: DXY Test Support
The US Dollar Index (DXY) traded around 100.00 levels, down to over 0.30% during the day, after an earlier test of highs near 100.86. Both Kamag -child Index Index (RSI) at 46 and the ultimate Oscillator at 59 shows the neutral momentum, while moving the average convergence (MACD) shines a purchase signal. The average direction index at 44 remains neutral, indicating no strong trend.
Short-term consumers are supported by the 20-day simple moving average (SMA) at 99.64, but the longer resistance remains stable with 100-day SMA at 105.11 and the 200-day SMA at 104.31 sign of ongoing pressure sale. Immediate support can be found at 100.28, 100.24 and 99.97, while resistance is seen at 100.73, 100.80 and 100.86.
US Dollar FAQ
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 in which it is found in circulation next to local notes. This is the most severely exchanged currency in the world, worth more than 88% of all global foreign exchange transfers, or an average of $ 6.6 trillion in transactions per day, according to data from 2022. Following World War II, the USD took from the British Pound as the world's reserve currency. For most of its history, the US dollar was gold -back, to the Bretton Woods agreement in 1971 when the gold standard left.
The most important single factor affecting the value of the US dollar is financial policy, shaped by the Federal Reserve (FED). Fed has two mandates: to achieve control inflation and promote full work. Its main tool to achieve these two goals is by organizing interest rates. When prices rise rapidly and inflation is above the target of 2% of the Fed, the Fed will increase rates, which contributes to USD value. When inflation falls below 2% or the unemployment rate is too high, the Fed may lower interest rates, with a greenback weight.
In extreme situations, the federal reserve can also print more dollars and make easing (QE) volume. QE is the process by which the Fed greatly increases the flow of credit to a stuck financial system. This is a non -standard policy proposal used when credit is dry because banks will not lend to each other (out of fear of default counterparts). This is a last way if only the decrease of interest rates is not likely to achieve the required result. It was the Fed weapon chosen to fight the credit crunch that occurred during the great financial crisis in 2008. It involves the Fed printing more dollars and used them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US dollar.
The quantity of tightening (QT) is the reverse process in which the federal reserve stops buying bonds from financial institutions and does not re -consist of the principal from the bonds it holds in new purchases. This is usually positive for the US dollar.
