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29 May 2025,07:22

Daily Market Analysis

Dollar Index Rises Ahead of Fed Minutes as Trade Policy Uncertainty Lingers

29 May 2025, 07:22

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 Key Takeaways:

*Dollar Index extends gains following strong U.S. economic data and improving risk sentiment.

*Trade policy uncertainty remains, despite a legal blow to Trump’s tariff agenda.

*Fed minutes in focus for clues on future interest rate decisions.

The Dollar Index, which tracks the greenback against a basket of six major currencies, extended its upward momentum as investors continue to digest a batch of stronger-than-expected U.S. economic data. However, concerns remain over fiscal sustainability and trade policy direction, especially after a recent U.S. trade court ruling struck down President Donald Trump’s use of emergency powers to impose global tariffs.

Market participants are now turning their attention to the Federal Reserve’s May meeting minutes, due later today, which could provide further insights into the central bank’s interest rate path.

Minneapolis Fed President Neel Kashkari urged caution, advocating for keeping rates steady until the inflationary impact of new tariffs becomes clearer. He warned against “looking through” supply-driven price shocks, suggesting a dovish tone within the Fed could emerge.

The recent legal setback to Trump’s trade policies has also raised hopes for de-escalation in global trade tensions, further improving investor risk appetite.

Technical Analysis

Dollar_,index, 4-Hour Chart: 

The Dollar Index is currently testing resistance at 100.55 after a strong bullish run. Technical indicators are flashing overbought signals:

  • MACD shows sustained bullish momentum.
  • RSI is hovering around 70, suggesting momentum remains strong, though overbought conditions could lead to short-term pullbacks.

A breakout above 100.55 could open the door to further upside toward 101.90. Conversely, failure to break through resistance may result in a pullback toward the support zone near 99.40.

Resistance Levels: 100.55, 101.90
Support Levels: 99.40, 98.80

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