- The US dollar index remained in a third consecutive losses in a third day, the weekly loss exceeds 1%.
- The plans reported by Israel to target Iranian nuclear installations raise doubts among traders on Trump's ability to manage tensions in the Middle East.
- The US dollar index flows below 100.00 and heads around 99.50, testing further.
The US dollar index (Dxy), which follows the performance of the US dollar (USD) compared to six main currencies, faces around 1.3% losses in just three days of negotiation on Wednesday, negotiating nearly 99.58. Throughout the week, the USD has already paid the price of volatile swarming of the Trump administration, which is confronted with difficulties on several fronts.
President Trump apparently no longer has firm control over Israeli Prime Minister Benjamin Netanyahu. During his Middle East visit, Trump announced that it was time for a new nuclear agreement with Iran and a second chance. However, behind negotiations on Tuesday, CNN said that Israel plans to hit nuclear installations in Iran – something that former president Joe Biden has been able to avoid – and cancels President Trump's diplomatic efforts in recent days in the region.
The second front is a domestic, with another failure for what Trump calls the “great beautiful bill”. Trump was frustrated by requests to considerably increase the state ceiling and the local tax deduction (salt), signaling a dead end by adopting a giant tax cut invoice. Trump told legislators not to leave the deduction of salt or the differences in relation to the social security nets hindering the bill, but the legislators of high tax states and conservative carnliners are still opposed to the bill unless their modifications are made, reports Bloomberg.
Daily Digest Market Movers: Bill heading towards the ground
- Republican representative Chip Roy says that it will still vote against Trump's tax bill. This despite the efforts of the President of the House of Representatives, Mike Johnson, offering a $ 40,000 salt deduction ceiling agreement. Johnson has confirmed that the tax bill would head to the ground for a vote, reports Bloomberg
- Weekly mortgage requests fell by -5.1% compared to the previous number to an increase of 1.1% in the previous week.
- Around 4:15 pm GMT, the Federal Reserve Bank (Fed) of the President of Richmond, Thomas Barkin, will make a speech with possible comments on the market. Barkin de Fed has already spoke earlier this week, saying that it would take several months, even in summer, before the economic situation and American data stabilize. Fed governor Michelle Bowman will also participate in the event.
- No luck for European or American actions that remain under zero this Wednesday. American shares flirt with losses between 0.50% and 1.00% of losses.
- The CME Fedwatch tool shows the chances of a drop in the interest rate by the federal reserve at the June meeting at only 5.4%. Further on, the decision of July 30 sees the chances that the rates are lower than the current levels at 26.9%. The recent Bellician comments of Fed officials have reduced the chances of a short -term rate drop.
- The 10 -year -old American yields are negotiated around 4.53%, cooling by the steep rally that we see on Monday.
Technical analysis of the US dollar index: once the ball has rolled …
The US dollar index cracks under pressure and is starting to be very dark. Finished on Wednesday, the Dxy extended losses below the threshold of 100.00 after closing under the substantial floor at 100.22 the day before, which could lead the index to make a nose movement. With recent geopolitical titles, traders are increasingly coming to the conclusion that President Trump could face several substantial setbacks in his term and his implementation of politics.
Right up, the braid ascending trend line and the 100.22 level, which held the DXY in September-October, are the first area of ​​resistance. Higher, 101.90 is again the next high resistance because it has already acted as a pivot level throughout December 2023 and as a base for reverse head and shoulder formation (H&S) during the summer of 2024. The simple 55 -day mobile average (SMA) at 101.94 strengthens this area as a strong resistance. In the event that the dollars bulls push the Dxy even higher, the pivot level of 103.18 comes into play.
If the downward pressure continues, a nose decision could materialize towards the lowest of the year at 97.91 and the central level of 97.73. Further below, relatively thin technical support is available at 96.94 before looking at the lower levels of this new price range. It would be 95.25 and 94.56, which means fresh stockings that we have not seen since 2022.
US dollar index: daily graphic
Central Banks FAQ
Central banks have a key mandate that ensures that there is price stability in a country or region. The savings are constantly faced with inflation or deflation when the prices of certain goods and services fluctuate. The constant increase in prices for the same goods means inflation, the constant prices lowered for the same goods mean deflation. It is the task of the central bank to maintain demand online by refining its policy rate. 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 close to 2%.
A central bank has an important tool at its disposal to increase higher or lower inflation, and it is by refining its rate of reference policy, commonly known as interest rate. On pre-communicated moments, the Central Bank will publish a declaration with its policy rate and provide additional reasoning on the reasons why it is left or changed (hiking). Local banks will adjust their savings rates and their loan rates accordingly, which in turn will make people more difficult or easier for people to gain on their savings or for companies to contract loans and invest in their business. When the central bank considerably increases interest rates, this is called monetary tightening. When it reduces its reference rate, monetary softening is called.
A central bank is often politically independent. The members of the Central Bank Policy Board are going through a series of panels and audiences before being appointed to a seat of the board of directors. Each member of this council often has a certain conviction on how the central bank should control inflation and subsequent monetary policy. Members who wish a very loose monetary policy, with low levels and cheap loans, to considerably stimulate the economy while being contained to see inflation slightly greater than 2%, are called “doves”. Members who want to see higher rates to reward savings and want to keep an allusion to inflation at any time are called “hawks” and will not rest until inflation is below 2%.
Normally, there is a president or a president who directs each meeting, must create a consensus between the hawks or the doves and has his last word to be summed up in a vote to avoid equality of 50-50 on the fact that the current policy is adjusted. The President will pronounce speeches which can often be followed live, where the position and the current monetary perspectives are communicated. A central bank will try to advance its monetary policy without triggering violent fluctuations in rates, actions or its currency. All members of the central bank will channel their position towards the markets before a political meeting event. A few days before a political meeting takes place until the new policy is communicated, members are prohibited from speaking publicly. This is called the electricity period.
