- The US dollar index witnessed an intermittent measure near the 99th area in the Monday session, as it recovered from its lowest level in three years.
- The induction uncertainty, consumer confidence drowns and high inflation expectations in influencing feelings.
- Technical signals remain declining, as a lower price of the main resistance was set in the 101.80-102.20 area.
The US dollar index (DXY) regained a little at the North American session on Monday after it decreased to its lowest point since 2022. Trading around the 99.60 region, the index tried to settle as investors’ reaction was signs of recession risk. The recovery came despite the pressures of the US dollar (US dollar), which paid Euro/USD and GBP/USD towards its highest level earlier in the day. While the market witnessed some relief after exemptions on mutual definitions in the United States, continuing concerns about inflation and consumer morale, and global trade frictions continued to control the scene. Technically, the negative pressure is still intact.
Daily Digest Market Movers: Reading balls in US dollars from the lowest level in three years
- On Friday, consumer confidence decreased sharply, as the Michigan University index fell to 50.8 in April, the loss of predictions and minimal status since June 2022.
- The inflation expectations have increased forward over the next 12 months to 6.7 %, which are the highest in the years, which complicates the federal reserve policy expectations.
- China imposed a 125 % new retaliatory tariff on US imports after the United States escalated last week; Work confidence is expected to suffer.
- The pound and the euro rose at first, but both EUR/USD and GBP/USD returned gains as Greenback showed signs of installation in a closing session.
- American trade officials have confirmed new exemptions from electronic imports of mutual tariffs, and to temporarily calm recession concerns, but are increasingly uncertain in politics.
Technical analysis
DXY is still a technical brittle despite the moderate apostasy on Monday. The average medium rapprochement (MACD) continues to generate a sale signal, while the RSI index (RSI) is 24.60 – neutral but is about to approach the conditions of sale. The price movement remained less than all the main moving averages, including SMA for 20 days at 103.13, SMA for 100 days in 106.34, and SMA for 200 days at 104.74. Lashing -term indicators such as Si -moving average for 10 days at 101.83 and SMA for 10 days at 102.23 also maintains a decreased slope. The resistance is seen in 99.88, followed by the key levels 101.83 and 102.23. Expectations remain declining while the index fails to restore those areas.
Questions and answers in US dollars
The USD (USD) is the official currency of the United States of America, and a “reality” currency for a large number of other countries where there is a circulating alongside local notes. It is the most trading currency in the world, as it represents more than 88 % of the rotation of global foreign currencies, or on average $ 6.6 trillion in transactions per day, according to data from 2022. In the aftermath of World War II, the United States took over the British pound the world reserves. For most of its history, the US dollar was backed by gold, even the Bretton Woods agreement in 1971 when the golden standard went.
The most important individual factor that affects the value of the US dollar is the monetary policy, which is formed by the Federal Reserve (Fed). The Federal Reserve has two states: to achieve price stability (control of control) and enhance full employment. Its primary performance to achieve these two goals is to adjust interest rates. When prices rise very quickly and inflation is 2 % higher than the Federal Reserve goal, the Federal Reserve will raise rates, which helps the value of the dollar. When inflation decreases to less than 2 % or the unemployment rate is very high, the Federal Reserve may reduce interest rates, which weighs to green.
In maximum situations, the Federal Reserve can also print more dollars and quantitative mitigation (QE). QE is the process that the Federal Reserve increases significantly from the flow of credit in a suspended financial system. It is a measure of the non -standard policy used when the credit is dry because banks will not lend to each other (for fear of failing to pay the opposite end). It is the last resort when it is unlikely to achieve interest rates simply the necessary result. The Federal Reserve is the preferred to combat the credit crisis that occurred during the great financial crisis in 2008. It includes the printing of the Federal Reserve more dollars and their use to buy US government bonds mostly from financial institutions. QE usually leads to the weakest US dollar.
The quantitative tightening (QT) is the opposite process in which the Federal Reserve stops buying bonds from financial institutions and does not invest the manager from the bonds he holds in new purchases. It is usually positive for the US dollar.
