The US Dollar Index (DXY), which tracks the strength of the US Dollar (USD) against six major currencies, has been limited in its movements and has fallen to a current level of 99.47 on Friday. This comes after a temporary rise above the key 100-point mark, which was followed by a strong rejection. The Greenback is now weakening slightly due to news about China possibly starting trade negotiations with the Trump administration. While markets await updates on trade negotiations, they are also anticipating the first official trade deal.
Meanwhile, a mineral deal between the US and Ukraine was signed, as reported by Bloomberg. This is a smaller deal in terms of potential capital for the US and does not include any military guarantees for Ukraine.
On the economic front, the NFP release for April was 177,000, slightly above the estimated 171,000. This initially led to a brief increase in the US Dollar’s strength, but the impact was not significant. The market views this as a positive result, with the next release in June expected to be more negative.
The US Dollar Index is currently at a crucial technical level after a three-day winning streak. The NFP release could determine its movements for Friday, with continued strength potentially resulting in a decisive break above the 100-point mark. However, even in this favorable scenario, there is a possibility of a technical rejection that could push the DXY to new three-year lows.
In terms of resistance, the DXY’s first level is at 100.22, which supported the index in September 2024. A break above the key 100.00 level would also be a bullish signal. A stronger recovery could lead to a return to 101.90, a pivotal level in December 2023 and a base for the inverted head and shoulders formation in the summer of 2024.
On the downside, any significant negative news could quickly lead to a test of the 97.73 support level. Further below, the next technical support is at 96.94, followed by lower levels within the new price range at 95.25 and 94.56. This would result in fresh lows not seen since 2022.