- The US dollar connects the gains on Tuesday, picking the DXY losing series.
- Federal reserve officials still believe that our rates are unchanged under tariffs and no commercial certainty.
- The US dollar index is heading over 99.00 in search of the number 100.00.
US dollar index (DXY), which tracks the performance of Greenback for six main currencies, achieves some minor gains, trading about 99.25 at the time of writing this report on Tuesday. Greenback began to rise higher at the end of Asian trading hours, after the Japanese Ministry of Finance (MOF) commented that its bond issuance plan may witness some change and change, with less sizes. This made the Japanese return collapse and saw the revenge of the Japanese yen (JPY) against Greenback, with the impact of domino in favor of the US dollar against many major currencies.
Meanwhile, the Federal Reserve (Fed) came out with comments from the Chairman of the Board of Directors of the Fed Minneapolis Neel Kashkari, who commented that the prices will remain fixed until the customs tariffs are clarified. Kashkari also indicated at Fed’s that there is no quick victory in the commercial talks, and that these talks may take months or years to conclude.
While the markets hope for a trade agreement for the United States in the coming days, this week will start with American data scheduled for Tuesday, after the anniversary holiday, which kept the markets closed. Traders can look forward to the orders of strong goods in the United States for the month of April and the Federal Manufacturing Index (Fed) for the month of May, which is a good pioneering indicator to find out how the manufacturing sector adheres after the introduction of customs tariffs.
Daily Digest Market Movers: Tergant Procs arrives on Tuesday’s conviction
- American permanent goods orders have been released for April. The main number saw only -6.3 % shrinking orders, against fear -7.9 %, coming from a 7.6 % review with previous reading by 9.2 % in March. Durable goods orders in the United States without transportation jumped by 0.2 %, overcoming the expected contraction by -0.1 % and above of a rate -0.2 % (initial reading 0 %) in March.
- At 14:00 GMT, US consumer confidence will be issued for the month of May, with no expectations and the previous number in 86.0.
- At 14:30 GMT, the Dallas Manufacturing Index is scheduled to be in May. There are no expectations, with the previous number decreased sharply by 35.8.
- The stocks are still adhering to the gains in the US bell. Europe sees shy gains of 1 %, while American stocks gather more than 1 % in the open market.
- The CME Fedwatch tool shows the chances of reducing the interest rate by the Federal Reserve at the June meeting only by 2.1 %. Moreover, the July 30 meeting sees the chances that the prices be lower than the current levels at 24.4 %.
- The return in the United States comes for 10 years by 4.47 % at the time of writing this report, another leg less than a peak of 4.62 % that was seen last Thursday.
Technical analysis of the US dollar index: Where is the follow -up?
The US dollar index is scheduled to return to some recovery after a long period of reducing the value of the currency, and this narration is picked up this Tuesday after seeing very early signs on Monday. We expect to see Dxy Swing back and search for the company’s resistance. This can lead to a fixed rejection at higher levels and pushes DXY until the lowest level in May, causing further the value of the green cells and loss of DXY.
On the upper direction, it is the level of 100.22, which hinders DXY in September to October, the first resistance, followed by the rising trend line near 100.80. Moreover, the simple moving average for 55 days (SMA) in 101.32 is the next level that must be paid attention to, followed by 101.90, which is a pivotal level throughout December 2023 and a base for the inverted H & S in the summer of 2024.
If DXY sees some renewable sale pressure, an unavoidable step may be achieved towards the lowest level per year to the date of 97.91 and the axial level of 97.73. Moreover, gentle technical support comes relatively at 96.94 before considering the lower levels of this new price range. This will be at 95.25 and 94.56, which means its lowest fresh levels that have not been seen since 2022.
US dollar index: daily chart
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times “hawks” will not be rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has a final saying when it is divided into the division of voting to avoid a 50-50 tie about whether the current policy should be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
