- The American dollar indicator recorded a disturbed action near Zone 99 in the Monday session, bouncing off the fresh three -year lowest level.
- Tariff uncertainty, sinking consumer trust and increased inflation expectations still burden sentiments.
- Technical signals remain bear, with a price constrained below the key resistance in the zone 101.80-102.20.
The American dollar index (DXY) slightly regained on the Monday session of North America after a decline to the lowest point from 2022 in trade around the area 99.60, the index tried to stabilize when investors reacted to signs of growing risk of stagflation. The reflection took place despite the pressure of the sale of fresh American dollars (USD), which caused EUR/USD and GBP/USD in the direction of multi -month maximes earlier on the same day. While the market has recorded some relief after extended exemptions against American mutual tariffs, concerns about inflation, consumer moods and global trade friction still dominated in the landscape. Technically, the inheritance pressure remains intact.
Daily Digest Market Movers: American dollar collections from the three -year -old lowest
- On Friday, consumer trust fell sharply, and the University of Michigan’s index fell to 50.8 in April, there is a lack of forecasts and meant the lowest since June 2022.
- Inflation expectations for the next 12 months increased to 6.7%, the highest for years, complicating the prospects of the federal reserve policy.
- China applied fresh retaliation tariffs of 125% on US import after escalation in the US last week; Business trust is expected to suffer.
- The initial pound and euro initially increased, but both EUR/USD and GBP/USD were profitable when green symptoms showed signs of stabilization in the session.
- American trade officials confirmed fresh exemptions regarding electronic imports from mutual tariffs, temporarily reassuring the recession’s fears, but increasing the uncertainty of politics.
Technical analysis
DXY remains technically feeble despite the bland reflection on Monday. The average mobility of convergence (MACD) still generates a sales signal, while the relative force indicator (RSI) is 24.60 – neutral, but similar to excessive conditions. The price action remained below all main movable average, including 20-day SMA at 103.13, 100-day SMA at 106.34 and 200-day SMA at 104.74. Short-term indicators, such as a 10-day interpretation, movable average at 101.83 and 10-day SMA to 102.23, also keep the slope down. The resistance is noticeable at 99.88, followed by key levels 101.83 and 102.23. The perspectives remain bears, while the index does not regain these zones.
FAQ in American dollars
The American 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 with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.
The most vital single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will boost the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.
In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan droughty, because the banks will not borrow (for fear of the contractor). This is the last last, when just lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.
Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and does not reinvest from the bonds that it has in fresh purchases. This is usually positive for the American dollar.
