The US Dollar is strong right now, thanks to positive economic data and hopeful news about trade. The DXY US Dollar Index, which found support at 97.00, is trading around 97.80. However, it might end a two-week winning streak since it has trouble breaking the 98.00 level. Market caution is due to the upcoming Federal Reserve decision and tariff deadlines.

Trade Developments And Agreements

US President Trump visited the Federal Reserve, urging for rate cuts but supporting Fed Chair Powell’s role. Trump is optimistic about trade deals, mentioning that some are finished, although a deal with Canada is still pending. In Europe, discussions with the EU hint at a possible framework agreement, while South Korea has proposed a $100 billion investment for favorable terms. In June 2025, durable goods orders dropped by 9.3%, largely due to a significant decrease in aircraft orders. Core capital goods orders also fell by 0.7%. The US has made agreements with several countries and aims for more before the August deadline. The US Dollar Index is finding support near 97.00, facing resistance at 97.80-98.00, although recovery is still uncertain. The 14-day RSI indicates a slight upward trend. Since the US Dollar is struggling to overcome key resistance, traders might want to employ strategies that take advantage of range-bound price movements. The Dollar Index is currently having a hard time breaking past 105.50, offering opportunities for those betting on sideways trends. This view is backed by the index’s recent performance, where several rallies have stalled around this level.

Monetary Policies And Market Implications

Recent economic reports create uncertainty, which often increases the value of options contracts ahead of major announcements. For example, the latest Consumer Price Index showed a rise of 3.4%, and job growth for April was only 175,000, below expectations. This situation eases pressure on the central bank to act aggressively, supporting the idea of using options to capture potential volatility around the upcoming policy decision. We suggest buying call options with strike prices above 106.0 as a cost-effective way to benefit from a potential breakout, driven by any unexpectedly strong data or trade developments mentioned by the President. On the flip side, put options with strike prices below the 104.0 support level could provide a good hedge against a negative shift from the central bank chairman. The mixed signals from officials indicate that traders should be ready for movement in either direction. Historically, the US Dollar tends to weaken once a rate-cutting cycle starts, suggesting that current strength could be short-lived. The latest durable goods report, which only saw a modest rise of 0.7%, did not change this view and indicates a slowdown from previous strength. Therefore, traders might consider selling longer-dated call options or buying puts, as the dollar’s peak for this cycle may be approaching. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now