Dollar Unwinding After Noisy Geopolitical Week
Dollar Heading Lower
The US Dollar is on course to end the week lower with the DXY down around 1.255, as of writing, following a reversal from last week’s highs. The move lower comes amidst a volatile macro backdrop this week. The opening theme for the week was Trump’s renewed commitment to secure Greenland, threatening tariffs against eight European countries unless they co-operated with his agenda. This threat was met with the promise of counter action from the EU, sparking trade war risks which led to a flight to safety. Gold has been the standout winner this week with the metal surging higher on elevated safe-haven demand while USD fell.
Trade War Risks Fade
These risks were unwound mid-week after Trump announced that he was scrapping tariff threats against Europe, noting that talks had led to the creation of a framework for a future deal on Greenland. While details are still forthcoming, the walking-back of trade-war risks has been welcomed by markets with risk assets rebounding accordingly. USD has remained weak in this environment with traders returning to typical macro drivers and the prospect of Fed rate cuts this year.
PMIs Due
Looking ahead today, focus will be on the latest US flash PMI data due this afternoon with both services and manufacturing expected to have risen against the prior month. Alongside this, traders will be monitoring any incoming headlines or noise around the Greenland deal, wary that Trump could resume hostility at a moment’s notice.
Technical Views
DXY
The failure at 99.15 has seen the market turning back down towards the 98.24 support, where price is currently stalled. With momentum studies now bearish, risks of a fresh push lower are seen with 96.63 the next support to watch if we breakdown further. Topside, 10.36 is the next target for bulls if price gets back above 99.15 near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.