US Dollar Index (DXY)
The U.S. dollar rebounded as traders reacted to a new round of tariffs announced by President Trump — this time targeting Canada, Switzerland, and South Korea with duties ranging from 35–39%. Despite the protectionist tone, the market response has been surprisingly muted, buoyed by resilient U.S. data and recent trade progress with the EU and Japan. The dollar is now on track for its first monthly gain in 2025.
Technical Outlook:
The DXY bounced off support near 99.00, currently trading near the upper boundary of its range.
- If the index breaks above 100.20, it could retest 101.85 — last seen in late April.
- A rejection here would bring 99.00 back into play, with 97.70 as the deeper support.
EUR/USD
The euro is losing momentum after a multi-week rally. Although CDS spreads and credit sentiment in the eurozone remain stable, the ECB is reportedly uneasy about the euro’s ~13% YTD rise, fearing a drag on exports and inflation targets. Traders are now cautious ahead of upcoming speeches from ECB board members.
Technical Outlook:
EUR/USD is hovering around 1.1400, showing signs of exhaustion.
- If the pair holds above 1.1380, bulls may attempt to retest 1.1484 and push toward 1.1666.
- If downside pressure picks up and price slips below 1.1300, look for a drop toward 1.1143.
USD/JPY
USD/JPY is hovering near 146.80, edging closer to the key 147.50 resistance as dollar strength returns. Former BoJ Deputy Governor Nakaso recently warned of “cracks in dollar supremacy,” suggesting the yen may gain long-term relevance — though near-term policy divergence keeps the pair supported.
Recent Chart Signal:
A clear bearish RSI divergence emerged last week — while price made a higher high, RSI printed a lower high. This loss of momentum was followed by a sharp rejection near 151, forming a bearish engulfing candle.
The pair is now testing a rising trendline support, with RSI hovering just above oversold territory (currently around 34.6). A weak bounce is forming, but momentum remains fragile.
Technical Outlook:
- A confirmed breakdown below 147.65 (support & trendline) could trigger further downside toward 145.84, and then 142.08.
- If the pair finds support and RSI recovers above 50, buyers could push back toward 149.24, though upside may now be capped by loss of momentum.
Summary:
- DXY: Rebounding on tariff news and solid U.S. data; resistance at 100.20, support at 99.00.
- EUR/USD: Stalling near 1.1400; ECB concerns over strong euro may limit upside.
- USD/JPY: Testing 147.50 resistance; BoJ rhetoric adds long-term uncertainty, but near-term bias is bullish.
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