US Dollar Performance in Global Markets
The US Dollar Index (DXY), which measures the US currency’s performance against a basket of major currencies, fell 0.50% at the start of Thursday’s US trading session, settling below the 100.00 level. This decline came after statements from US President Donald Trump and Treasury Secretary Scott Besant, who confirmed that no unilateral offer had been made to China regarding tariff reductions. Trump indicated that the reciprocal tariffs could be reconsidered if negotiations do not proceed as his administration would like, increasing market uncertainty.
Durable Goods Data: Strong Growth with Warnings
US Commerce Department data for March 2025 showed a significant increase in durable goods orders of 9.2%, driven by a massive 139% increase in commercial aircraft orders, with Boeing receiving 192 orders. However, core claims, which exclude aircraft, rose just 0.1%, indicating weak business investment amid ongoing trade tensions.
Unemployment Claims: Labor Market Stabilizes
U.S. initial jobless claims rose by 6,000 to 222,000 for the week ending April 19, 2025, according to the Department of Labor. Despite this slight increase, claims remain within the healthy range of 200,000 to 250,000, reflecting a stabilizing labor market. Continuing claims also fell by 37,000 to 1.84 million, indicating continued strength in the labor market despite economic concerns. Housing Market: Sales Decline Amid Rising Prices
US existing home sales fell 4.9% in January 2025, reaching a seasonally adjusted annual rate of 4.08 million units, the lowest level since 1995. This decline was attributed to rising home prices, with the median price reaching $407,500, and mortgage rates exceeding 6.5%. However, economists expect the market to improve in 2025 as prices stabilize and the housing supply increases.
The Impact of Trade Tensions on the Global Economy
International Monetary Fund Managing Director Kristalina Georgieva warned that escalating trade tensions, particularly those stemming from the tariffs imposed by the Trump administration, could negatively impact the stability of the global economy. She noted that these tensions could hinder investment and economic growth, calling for a swift resolution of trade disputes to avoid a global economic slowdown.
Interest Rate Forecast: Low Probability of Cuts
The probability of a Federal Reserve rate cut at its May 2025 meeting is approximately 6.1%, while the probability of no change is 93.9%. At the June meeting, the probability of a rate cut is approximately 58.7%. These forecasts reflect market anticipation regarding monetary policy directions in light of current economic data.
The United States faces multiple economic challenges, including trade tensions with China and a slowdown in some market indicators such as home sales, despite the continued strength of the labor market. These challenges require balanced economic policies to maintain economic stability and promote future growth.
US Dollar Declines After Temporary Gains
After two days of gains, the US Dollar Index (DXY) has declined again. Despite repeated attempts, the index failed to break the 100.00 barrier. Consequently, it is currently trading in a narrow range between 100.00 and 98.00. Amid this ongoing volatility, traders are beginning to feel frustrated and may prefer to shift their funds towards gold as a defensive option.
It is noticeable that the market is trying to absorb mixed economic data. The superiority of durable goods data briefly supported the dollar, but it was not enough to maintain the upward momentum. Furthermore.
US Bonds: Signs of Weak Confidence
Meanwhile, US 10-year Treasury yields stabilized at 4.32%, reflecting a state of anticipation. Yields often rise with improved confidence in the US economy. However, as things stand, these figures reflect a fragile balance.
Resistance Points: Opportunities Remain for the Upside
Currently, the first resistance level stands at 99.58. This level constituted an important rebound point after the false break the index experienced during trading on Wednesday and Thursday. If the dollar is able to break this barrier again, it could continue its rise towards 100.22.
Once the 100.00 level is sustained, the index could regain its upward momentum. This would likely lead to a target of the 101.90 area, which represents strong psychological resistance. If this scenario materializes, we would be entering a new upward wave extending beyond the 2024 peak.
However, it is important to emphasize that this requires continued support from expected economic data and monetary policy. Any sudden change in interest rate expectations could alter the index’s trajectory.
Support Levels: The Downturn Is Not Over
On the other hand, the support level at 97.73 appears very close. It appears fragile against any sudden selling pressure. If this level is broken, the index would head towards weaker support at 96.94. However, the latter does not have enough momentum to halt the dollar’s decline, especially if the sell-off driven by geopolitical concerns continues.
If the previous two supports are lost, the next target will be lower levels not seen since 2022, namely 95.25 and 94.56, respectively. These lows could return the market to a broad correction phase, especially if expectations of a Federal Reserve rate hike recede.
Momentum Indicators: Mixed Signals Confuse Investors
Technical momentum indicators such as the Relative Strength Index (RSI) point to a decline in upward momentum. The RSI is currently below the 50 level, a sign of weak demand for the dollar. On the other hand, the MACD is showing a slight negative crossover, which increases the likelihood of a correction. However, the market still needs strong catalysts to clearly move.
Forward-Looking Outlook: Will the Dollar Hold Its Ground?
In the short term, the US Dollar Index is likely to remain confined to its current range between 100.00 and 98.00. Movements may be directly linked to the results of economic data, such as manufacturing and housing indicators, as well as upcoming employment figures.
With the upcoming monetary policy meetings approaching, the market will remain on alert. Any surprises could push the index in one of two directions: either breaking new resistance levels or sliding to three-year lows. Conclusion: Caution is warranted amid mixed signals.
So far, there is no clear direction for the US Dollar Index. Despite some upward attempts, the index remains under sustained pressure. In the absence of strong catalysts, traders are advised to closely monitor technical levels, especially the 100.00 resistance and 97.73 support.
In this volatile environment, using technical analysis, supplemented by fundamental data, is essential for making informed investment decisions. Volatility is expected to remain until the US monetary policy becomes more clear.
