Dollar Under Pressure
US Dollar is under heavy selling pressure today ahead of the keenly awaited March CPI print due this afternoon. Trump’s U-Turn on tariffs yesterday has caused seismic moves across markets. With risk assets rallying firmly, USD has fallen from favour again, tracking the move in treasuries lower. Fears for the health of the US economy in response to the sweeping tariffs announced last week have been a major headwind for USD and it seems that the 90-day pause announced for many countries yesterday has done little to improve sentiment. Indeed, there is growing concern over the unpredictable nature of Trump’s policy creation and control, leading to further uncertainty among USD traders. Against that backdrop, we’re seeing a capital exodus from USD positions into other assets.
US Inflation Up Next
Looking ahead today, focus turns to the March CPI print due this afternoon. The annualised monthly headline reading is expected to fall to 2.5% from 2.8% prior which, if seen, should see near-term Fed easing expectations rising, putting further pressure on the Dollar. Despite the headline forecast, the monthly core reading is expected to rise to 0.3% from 0.2% prior. Typically, such as rise, if seen, would cause USD to rise. However, given recent inflation fears as a result of the trade war, any uptick in core today should actually weaken USD further on heightened economic concerns. As such, USD risks appear skewed to the downside into the release today. In the FX space, commodity currencies look best placed to rally against the greenback given the shift on tariffs.
Technical Views
DXY
The US Dollar recovery has failed for now into the 103.40 level with price since turning lower. Focus now is on whether the 101.91level holds. If we break below that level, risks are pointed towards a continuation to the 100.38 level next, in line with bearish momentum studies readings.
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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.