USD Under Pressure
The US Dollar continues to push lower as we head into the weekend. An absence of long-threatened trade tariffs from Trump in his first week back in office has seen traders unwinding USD long positions. Traders had been expecting a firm rally in the Dollar fuelled by protectionist US trade actions. However, with Trump delaying those actions for now, and sounding less aggressive towards China, USD has lost steam over the week.
Trade Tariffs In Focus
Looking ahead, Trump has threatened to action 25% tariffs against Mexican and Canadian goods by Feb 1st. While China was also mentioned, recent comments from Trump suggest the President is taking a less aggressive stance. Trump said that he didn’t want to have to tariff China and felt the two countries could strike a trade deal. This air of compromise is fuelling speculation that Trump’s overall tariff action might be less aggressive than promised over the course of his campaign.
Trump & Fed
If seen, this would heavily dilute the protectionist driver for USD strength, keeping the Dollar pressured lower near-term. It would also remove a good deal of the upside inflation risk facing the US which would in turn fuel a shift in Fed expectations, reinforcing USD selling. As such, it will be key to monitor the Presidents comments regarding trade ahead of that Feb 1st deadline.
Technical Views
DXY
The sell off in the Dollar has seen the market breaking below the bull channel with price now testing support at the 107.24 level. With momentum studies growing more bearish, risks of a deeper drop towards 105.97 are seen if price breaks current support.
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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.