- The US dollar decreases for a second consecutive day, after softening American inflation data.
- The Korean Won is strengthening on the greenback after the announcement that the two countries discussed the Forex markets.
- The US dollar index reaches the support before 100 at the level and bounces for the moment.
The US dollar index (Dxy), which follows the performance of the US dollar (USD) against six large currencies, plunged on Wednesday in the direction of the 100.60. Decrease moves comes after inflation softer than expected in the United States and confirmation that the United States (United States) and South Korea have been in currency talks, according to Bloomberg. The greenback is on the backfoot against most of the main Asian currencies.
The news opened the injuries that are not also earlier this month, when the Taiwan dollar (TWD) was greatly appreciated against the US dollar. In addition, the sweet Consumer price index (CPI) Reading for April published Tuesday has reworked betting rates for rates for Federal reserve (Fed) This year, seeing the probability of a rate drop increase compared to last week. This narrows the rate differential between the United States and other countries and devalues the green back a touch.
Daily Digest Market Movers: where there is smoke …
- US President Donald Trump said he had good hopes for a breakthrough between Russia and Ukraine at Thursday’s meeting.
- Only two speakers fed for this Wednesday:
- Vice-president Philip Jefferson said that Fed policy was well placed to respond in a timely time on a drop in surprise or an increase in inflation. However, the vice-president of the Fed continued by saying that there was a strong uncertainty that the inflationary pressures would be temporary.
- Around 9:40 pm GMT, the president of the Federal Reserve Bank of San Francisco, Mary Daly, participated in a cat by the fireside during the annual forum of conference and annual administration of California Bankers Association.
- Actions try to brush the negative tone while American actions see an elevator at the back of the several transactions that US President Trump brings back from his trip to the Middle East.
- The CME Fedwatch tool shows the chances of a drop in the interest rate by the federal reserve at the June meeting at only 8.2%. Further on, the decision of July 30 sees the chances that the rates are lower than the current levels at 38.6%.
- American yields at 10 years are negotiated around 4.48%, stable while merchants closed the numbers of Tuesday inflation and rates drop for 2025.
Technical analysis of the US dollar index: First Taiwan, now Korea …
A title on possible currency adjustments seems to be sufficient to trigger a certain devaluation for the greenback. The fact that South Korea and the United States have been in talks are enough for 6-year markets in anticipation of the real event. If more titles are revealed on the question, or the real intervention of the Korean Bank (BOK) takes place, expect to see possibly a revisit of Doxy to the lowest multi-year at 94.56.
Uplightening, 101.90 is again the first 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. In case the DXY bulls are even higher, the 55 -day simple mobile average (SMA) at 102.29 comes into play.
On the other hand, the previous resistance at 100.22 acts as firm support, followed by 97.73, near the hollow of 2025. More 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
Banking crisis faq
The March 2023 banking crisis occurred when three American banks with a strong exposure to the technological sector and the crypto underwent a peak of withdrawals which revealed serious weaknesses in their balance sheets, resulting in their insolvency. The highest level of banks was Silicon Valley Bank (SVB), based in California, which has increased withdrawal requests due to a combination of customers fearing the fallout from the FTX debacle, and significantly higher yields offered elsewhere.
In order to make the buyouts, the Silicon Valley Bank had to sell its bond assets to the predominantly American Treasury. Due to the increase in interest rates caused by the rapid tightening measures of the federal reserve, however, the bonds of the Treasury had dropped considerably. The news that SVB had taken a loss of $ 1.8 billion after the sale of its obligations sparked panic and precipitated a large -scale race on the bank which ended with the Federal Deposit Insurance Corporation (FDIC) to take charge. The crisis in San-Francisco First Republic based on American banks. On March 19, the Credit Suisse in Switzerland fell in fault after several years of bad performances and had to be taken up by UBS.
The banking crisis was negative for the US dollar (USD) because it changed expectations concerning the future course of interest rates. Before the crisis, investors expected that the Federal Reserve (Fed) continues to increase interest rates to combat persistent inflation, however, once it has become clear how much stress has put on the banking sector by devaluing the banking assets of the US Treasury bonds, the wait was that the Fed would stop or even revers its political trajectory. Since higher interest rates are positive for the US dollar, it has dropped because it has reduced the possibility of a policy of politics.
The banking crisis was an optimistic event for gold. First of all, he benefited from the demand because of his status as a security asset. Secondly, this led investors to expect the Federal Reserve (Fed) to arouses its aggressive rate reduction policy, for fear of the impact on the financial stability of the banking system – a drop in interest rates expectations has reduced the opportunity cost of the holding of gold. Third, gold, which is at the cost of US dollars (XAU / USD), has increased in value because the US dollar has weakened.
