Dollar Down Further
The US Dollar remains heavily sold on Tuesday with the DXY breaking down to fresh YTD lows as the move sub-$100 continues to gather pace. Concerns over the prospect of Trump’s tax and spending bill passing through Congress have visibly weakened USD sentiment. With around $3.3 trillion expected to be added to the US national debt if Trump’s plans go ahead, traders are choosing to move capital away from USD as uncertainty rises.
US Trade Developments
Alongside uncertainty around the bill, the latest developments on the US trade front are also adding to bearish sentiment. Following news of an agreement between the US and China last week on rare earths, reports show that the US and EU are moving closer towards striking an agreement with the EU said to be willing to accept a 10% tariff on exports. US/Canada negotiations are said to be in a better place this week too after Canada refrained from actioning a digital services tax which was due to start this week.
Fed Easing Expectations
With the trade landscape looking more encouraging, traders perceive US inflationary risks to be falling, turning focus back to Fed easing expectations. The market is currently looking for a cut in September with one further cut by year end. However, if Friday’s US jobs data comes in on the weak side, pricing for a cut in July is likely to move higher, putting fresh pressure on USD.
Technical Views
DXY
The sell off in DXY continues to push lower here with price now falling beneath the 96.89 level. With momentum studies bearish, focus is on a continuation lower with 94.85 the deeper target for bears. Only a move back above 99.15 will ease the bearish risks seen 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.