The dollar index was firmer on Tuesday and recovering from Monday’s turbulence, sparked by DeepSeek shockwave.
Today’s gap higher opening and (so far limited) bounce were sparked by Trump’s renewed tough tariff rhetoric.
The action is calmer compared to Monday’s wide swings and signal potential recovery (if talks about tariffs do not fade again) after Monday’s dip to five-week low was contained by the top of ascending daily Ichimoku cloud (106.75) that now offers solid support.
However, recovery so far did not show significant results, as initial barriers at 108.00 zone (Fibo 38.2% of 110.00/106.75 pullback /10DMA) is still intact.
Conflicting signals from daily chart (momentum remains negative / RSI is heading north, and MA’s are in mixed setup) do not provide adequate support, although dollar is still afloat.
All eyes are on Wednesday’s FOMC rate decision, which is widely expected to result in unchanged US interest rates, but markets want to hear more from Chief Powell, particularly about the central bank’s rate trajectory in 2025.
Most economists expect 50 basis points cut in total in 2025, with first 25 bps cut to possibly occur in the second half of the year.
Elevated inflation in the US and expectations for further price pressure on President Trump’s election promise about strongly boosting US economic growth, should further support the dollar.
Res: 108.00; 108.37; 108.75; 109.25
Sup: 107.50; 106.89; 106.75; 106.12
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