The US Dollar lost momentum on Wednesday after weaker-than-expected PMI data and a downbeat Federal Reserve Beige Book painted a gloomy picture of the US economy. Uncertainty surrounding trade policy and mixed messages from President Trump further weighed on sentiment. As the US Dollar Index (DXY) dips below key technical levels, investors are bracing for heightened volatility amid slowing business activity and unclear fiscal direction.
Contents
- 1 Market Overview: US Dollar Under Pressure Amid Economic Slowdown and Trade Policy Uncertainty
- 2 Slower Business Activity Evident in Latest PMI Data
- 3 Key Drivers Behind the Dollar’s Decline
- 4 Technical Analysis: DXY Bearish Below Key Averages
- 5 Outlook: Dollar Faces Headwinds Despite Oversold Signals
- 6 About H2T Finance
Market Overview: US Dollar Under Pressure Amid Economic Slowdown and Trade Policy Uncertainty
The US Dollar Index (DXY) failed to sustain early gains on Wednesday, retreating toward the 99.50 level as ongoing trade policy uncertainty and weakening business momentum weighed on investor sentiment. After briefly touching the 100.00 mark during the Asian session, the Greenback lost traction following comments from Treasury Secretary Scott Bessent and renewed market concerns about President Donald Trump’s inconsistent policy stance.
Slower Business Activity Evident in Latest PMI Data
According to S&P Global, the flash Composite PMI for April declined to 51.2 from 53.5, signaling a notable slowdown in overall economic activity. While the Manufacturing PMI showed a slight uptick to 50.7, the Services PMI dropped sharply to 51.4 from 54.4, reflecting weaker demand in the services sector — a key driver of the US economy.
Chris Williamson, Chief Business Economist at S&P Global, commented that “growth momentum is clearly weakening,” and warned that persistent inflation pressures are complicating the Federal Reserve’s policy path.
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Key Drivers Behind the Dollar’s Decline
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Trade Policy Ambiguity: Treasury Secretary Bessent noted that formal tariff negotiations are not imminent and won’t take place at the Trump-Xi level yet. Mixed signals from President Trump — who initially adopted a conciliatory tone only to later reverse it — have further confused markets.
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Fed’s Beige Book Paints a Bleak Picture: The Federal Reserve’s latest Beige Book indicated that overall economic activity remains flat, but highlighted growing concerns about tariffs. Several districts reported stagnant or slightly declining employment, slowing wage growth, and increased business costs due to tariffs.
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Fiscal Concerns Loom: Analysts at Standard Chartered warned that expected tariff revenue will fall short of covering proposed tax cuts, which could add upward pressure on US interest rates and further cloud the outlook.
Technical Analysis: DXY Bearish Below Key Averages
From a technical standpoint, the US Dollar Index (DXY) continues to trade with a bearish bias near 99.56, posting a modest daily loss of 0.08%. Price action remains confined between 98.86 and 99.67, signaling indecision ahead of upcoming macroeconomic data.
Momentum indicators are mixed:
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RSI sits at 34.79, nearing oversold territory.
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Awesome Oscillator is neutral at −3.45.
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MACD remains in selling territory, reinforcing short-term bearish sentiment.
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Stochastic RSI Fast (3, 3, 14, 14) is at 38.59, offering no clear signal.
Key resistance levels:
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10-day EMA: 100.10
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Simple Moving Average (SMA): 99.95
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Additional resistance at 100.10 and 101.26
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- Key support:
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Immediate support lies at 98.94. A decisive break below could lead to a deeper pullback toward the mid-97.00 range.
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Outlook: Dollar Faces Headwinds Despite Oversold Signals
While technical indicators suggest the US Dollar is nearing oversold levels, persistent uncertainty surrounding trade policy, inflation, and fiscal dynamics may cap any short-term recovery attempts. Traders remain cautious ahead of further economic updates and potential policy signals from the Federal Reserve.
About H2T Finance
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