The US dollar is turning into positive after approving the largest German spending package while talking Trump and Putin
- The US dollar turns green and avoids its lowest level in the US dollar index.
- Traders believe that Germany enhances its spending by 0.5 trillion euros.
- The US dollar index recovers from the previous declines as Putin and Trump speaks.
The US dollar index (DXY), which tracks the performance of the US dollar (USD) for six major currencies, is trading at 103.60 at the time of writing this report on Tuesday, while US President Donald Trump and Russian President Vladimir Putin speak to each other. The initial step came after many news headlines, which increased geopolitical uncertainty and the main events that occur during the day. Any address can be an incentive to push DXY to the lowest level up to six months and under the level of 103.00.
At the time of writing this report, it was a major meeting between the President of the United States (the United States) Donald Trump and Russian President Vladimir Putin, where the two parties discuss the lands and divide some assets in Ukraine. This has sparked fears that Ukraine will be torn and the European Union (EU) and the North Atlantic Treaty Organization (NATO) will be strengthened to enhance more defensive spending.
Meanwhile, Israel broke this morning the endowment of the truce with Gaza, which began in January by attacking the tactical installations and buildings for Hamas. This, in turn, may bring more attacks in the Red Sea by the Houthi rebels and revenge for Hamas.
Daily Digest Market Movers: The Next Newspapers
- Several data points have already been released:
- Monthly construction permits amounted to 1.456 million, over the estimate of 1.45 million in February, less than 1.473 million in January.
- The start of housing for the month of February was 1.501 million units, and a victory over 1.38 million expected, compared to 1.366 million in January.
- The monthly export price index increased by 0.1 %, overcoming the expected contraction by 0.2 % in February, coming from 1.3 % positive in January. The import price index jumped by 0.4 %, overcoming the expected contraction by 0.1 % and compared to the positive 0.3 % in January.
- At 13:15 GMT, industrial production came out for the month of February. The actual number came 0.7 %, overcoming 0.2 % consensus and above 0.5 % in January.
- The shares are mixed again on Tuesday, as European indicators rose about 1 % on the chances of passing the German spending budget, while American stocks dive near 1 % on the trading day clearly.
- The CME Fedwatch tool sees a 99.0 % chance of lack of changes in the interest rate at the upcoming Federal Reserve on Wednesday. The possibility of a rate of reduction in the May meeting currently 21.5 %.
- The return in the United States is traded for 10 years about 4.30 %, off its lowest level for five months at 4.10 % printed on March 4.
Technical analysis of the US dollar index: It is not a straight line
The US dollar index (DXY) crawls with its last range between 103.18 and 103.99 on Tuesday with an increase in pressure on the negative side. With the deterioration of recent US economic and geopolitical data that would benefit the eurozone, such as possible approval in Germany to increase spending and calling between Trump and Putin to a ceasefire in Ukraine, another leg of DXY can be a possible result.
If the markets consider the current developments as “selling rumors and buying the truth”, then some sudden upward trend will initially see and see a return to 104.00. If the bulls can avoid technical rejection there, look for a large racing towards a circular level of 105.00, with a simple moving average convergence for 200 days (SMA) at that point and enhances this area as a strong resistance. Once it is broken in that area, it will present a series of axial levels, such as 105.53 and 105.89, as covers.
On the negative side, the round level of 103.00 can be considered declining in the event of the start of American revenues again, with up to 101.90 cannot be conceived if the markets surrender to their long -term property of the US dollar.
US dollar index: daily chart
Questions and answers of a banking crisis
The banking crisis occurred in March 2023 when three US -based banks -based banks and Crypto have suffered a rise in withdrawals that revealed severe weaknesses in their public budgets, which led to its insolvency. The most fairy of banks was the California -based SVB bank, which witnessed an increase in withdrawal requests due to a mixture of customers who fear the repercussions of the FTX disaster, and much higher returns are offered elsewhere.
In order to fulfill the redemption, Silicon Valley Bank had to sell its shares of mostly US Treasury. Due to the high interest rates caused by the rapid tightening measures of the federal reserve, the value of the treasury bonds has decreased significantly. The news that SVB has a loss of $ 1.8 billion in selling its bonds caused a panic and was widespread on the bank, which ended with the federal deposit insurance company (FDIC) that had to seize it. On March 19, Credit Suisse was mistaken in Switzerland after several years of weak performance and had to seize it by UBS.
The banking crisis was negative for the US dollar (USD) because it changed expectations about the future interest rate path. Before investors expected crises that the Federal Reserve (Fed) continues to raise interest rates to combat high inflation constantly, as soon as it becomes clear how much pressure he was putting in the banking sector by reducing the value of bank banks to US Treasury bonds, the expectation might stop or even reflect the course of his policy. Since high interest rates are positive for the US dollar, it has decreased because it deduced the possibility of a political axis.
The banking crisis was a bullish gold event. First, he benefited from the request because of its position as a safe origin. Second, this has led to investors that the Federal Reserve (Fed) will stop the policy of enhancing aggressive prices, for fear of affecting the financial stability of the banking system-reduced low interest rate expectations from the cost of retaining gold. Third, the value of gold, which is priced in US dollar (Xau/USD), has increased, because the US dollar and weakness.
