The dollar is keeping more mixed ahead of European trading today, with the intense selling from last week cooling off slightly. USD/JPY is still seen down 0.2% to 143.23 but well off the lows of 142.25 earlier in the day. Meanwhile, EUR/USD is flat at 1.1355 currently. While not my favourite indicator of sentiment, the dollar index is meeting a critical technical juncture in the past week:
Dollar index (DXY) weekly chart
It is testing the lows from July 2023 with the greenback haven’t been this disliked since the aftermath of the Covid pandemic.
Amid Trump’s garbled approach on tariffs, it is making it tough for investors to gain much confidence about the dollar at the moment. That speaks a lot to the extent of the disdain for the dollar especially in times when markets are seeking safe havens and Treasury yields blowing up.
As things stand, the dollar continues to be reliant on the same factors impacting broader market sentiment at the moment. And that is having to move with the flow of trade/tariffs developments.
So far today, the selling has cooled a little bit. But the danger remains ever present as further escalation by either the US or China risks keeping the dollar in this tailspin for longer.
