The US Dollar is currently above 97.50, despite some earlier drops. Initial Jobless Claims have decreased to 227,000, but Continuing Jobless Claims are at their highest level since 2021. The June FOMC Meeting Minutes show that most officials are open to a rate cut this year. However, momentum indicators suggest a weak recovery, with the RSI below 50 and the MACD showing only slight improvement. The US Dollar Index (DXY) has dropped slightly from its daily high of 97.92 after strong labor data. Right now, the index sits at 97.65, facing resistance between 97.80 and 98.00. The Greenback fell during Asian trading but found some support due to rising global trade uncertainty.

President Trump’s Tariff Proposals

President Trump announced tariffs on more countries, including a significant 50% tariff on Brazil. There’s been a small decline in Initial Jobless Claims, now at 227,000, indicating a strong labor market. However, Continuing Jobless Claims rose by 10,000, suggesting re-employment challenges. The June FOMC Minutes reveal that many officials support a rate cut this year, but opinions vary. While expectations for a July cut have lessened, focus has shifted to September. Trump has been pressuring the Fed for lower rates due to rising national debt and a complicated global trade situation. The DXY is in a falling wedge pattern, which could signal a bullish reversal if resistance levels are overcome. The US Dollar Index is holding above 97.50, recovering from its intraday high of 97.92. The currency seems to react more to small shifts in data rather than large trends. The initial drop during Asian trading likely arose from concerns about trade, but that changed as global uncertainty increased demand for the dollar as a safe haven. The latest labor data shows Initial Jobless Claims dropped to 227,000, which is a positive sign for job market stability. On the other hand, the rise in Continuing Claims, now at its highest since 2021, indicates that while fewer people are applying for unemployment benefits, they are taking longer to find new jobs. This situation could signal tighter re-hiring, particularly in industries affected by interest rates or lower investment. Technical indicators remain cautious. The RSI stays below 50, showing weak momentum, and while the MACD has slightly improved, it does not inspire confidence. A technical analyst might note the falling wedge pattern, typically leading to a significant move — often upward — but confirming that move requires a clear break above resistance levels, currently around 97.80 to 98.00.

FOMC Meeting Minutes and Market Expectations

The June FOMC meeting notes highlighted a tendency among Fed officials to favor a rate cut this year. However, there is less agreement on when that cut will happen. Initially, traders expected a July move, but now attention is shifting to September. Powell has acknowledged calls for easing, but the cautious tone from the Committee suggests they want more than just one data point — whether jobs or inflation — before taking action. Ongoing trade issues add to this uncertainty. The proposed 50% tariff on Brazil, along with potential new foreign tariffs, raises worries about supply chains and rising costs. This pressure could show up in inflation data later in the summer, putting more emphasis on data from July and early August. If costs rise but consumer spending and hiring do not increase, the Fed’s future actions could shift dramatically, rather than following the slow adjustments officials prefer. Currently, we should view the DXY setup as a compressed risk. Each piece of data might have a more immediate effect because rate expectations are closely grouped. Any misstep in payrolls, a surprisingly high CPI, or significant changes in consumer data could easily change the timeline. Until then, the dollar is reactive — responding to data rather than controlling the narrative. From here, we should focus on two key areas: first, whether the resistance at 97.80-98.00 breaks. If it does, there could be movement toward 98.40. Second, the bond market, particularly 2-year yields, is closely aligned with Fed expectations. If these yields decrease despite steady economic data, we should consider what’s being quietly priced in. The administration’s vocal stance on policy direction, particularly dissatisfaction with the Fed’s strategy, contributes to the push for lower rates. However, this influence is indirect. It’s the market’s interpretation of debt conditions and leadership messages that often leads to volatility around data releases. It’s not just about what’s said; it’s how the market reacts during low liquidity times. This means we are in a situation where any headline could trigger immediate adjustments. Fixed income spacing is narrow, commodity currencies are particularly sensitive, and assets linked to yield expectations — like tech stocks and leveraged FX pairs — are closely monitored. For now, unless key levels on the DXY are breached, and without clearer signals from core inflation or revised jobs data, the broader approach remains one of patience, focusing on smaller movements rather than major announcements. That’s where the real insights can be found. Create your live VT Markets account and start trading now.

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