After a number of positive economic reports and the hope of a US-China trade agreement, the US Dollar Index (DXY), bounced and tested the key resistance level of $100. This week, the index is in focus as President Donald Trump puts pressure on the Federal Reserve to make a decision about interest rates.
The US Dollar Index has risen after a series of mixed statistics
After a mixed series of macro-numbers, the US Dollar Index has risen from its low last month of $97.94 up to the resistance level of $100.
A report from the Conference Board showed that consumer confidence dropped to 86 points in April, as fears about Trump’s tariffs, inflation and jobs increased. This figure has fallen sharply over the last few months and could lead to a US recession.
ADP also reported that private employers created only 61,000 jobs, a much smaller number than expected (114K). The non-farm payrolls figures released on Friday showed that the economy had created 177k new jobs in April.
In addition, the NFP figures showed that wage growth stagnated and that unemployment remained at 4,2%. Analysts still believe the labor market is likely to soften over the next few months, if tariffs are maintained.
A closely watched report revealed that the US trade deficit soared to an all-time high, as businesses rushed to purchase abroad before tariffs. All of this suggests that soaring imported led to an economic contraction in the first three months.
In February, both the PCE and headline numbers declined slightly.
Federal Reserve interest rate decision ahead
The DXY Index is anticipating the reaction of the Federal Reserve to its upcoming interest rate announcement. The bank is not expected to cut rates at this meeting, according to economists.
Jerome Powell, as well as most bank officials, have indicated that they will not reduce interest rates until the data indicates that inflation is moving down.
The Fed will therefore signal to the market that it will maintain rates at their current levels for some time as they observe trends in inflation. The Fed’s majority believes that the tariffs of Trump will cause inflation to rise in the next few weeks.
Trump implemented a tariff of 145% on Chinese products, forcing some sellers such as Temu or Shein to raise prices. Positively, Trump has shown signs of considering negotiations with China. China also indicated that it is willing to engage in negotiations.
US Dollar Index Technical Analysis
Source: TradingView
On the daily chart, it is clear that DXY Index bounced back from a recent low of $97.94.
There is still a chance that this recovery could end very soon, as the index already has a death-cross pattern. The pattern is formed when the Exponential Moving Avgs. (EMAs) of 50 and 200 days cross.
This continuation symbol is also a cup-and-handle pattern in reverse. The handle is formed by this rebound.
The US Dollar Index is likely to resume its downward trend this month. The next level to monitor will be $97.95 – the low point on April 22.
The post DXY Index – Chart showing the US Dollar Index Crash is still not over may be updated as new information unfolds.
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