After hitting fresh six-month peaks near 1.3250, GBP/USD is now under a tepid selling pressure due to a strong comeback in the Greenback, causing it to retreat toward the 1.3200 support area. Next on the UK docket are inflation figures, expected to be released on Wednesday.
US DOLLAR INDEX Forecast and News
US Dollar pares losses, DXY holding near three-year lows
Fears of a US recession amid a trade war with China hit the USD hard. Beijing announced on Friday retaliatory levies of 125% on US imports. The US Dollar Index fell to a three-year low of 99.02, bearish bias intact.
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EUR/USD remains offered and below 1.1300
EUR/USD is feeling the squeeze, revisiting the area around 1.1280 as the US Dollar gains extra momentum on Tuesday. Mixed domestic data from Industrial Production and Economic Sentiment haven't done the Euro any favours either.
Japanese Yen sticks to modest intraday losses against USD; bullish potential seems intact
The Japanese Yen is undermined by receding safe-haven demand amid a positive risk tone. Concerns about Trump’s tariffs and hopes for a US-Japan trade deal could limit JPY losses. The divergent BoJ-Fed policy expectations further contribute to capping the USD/JPY pair.
Gold embarks on a consolidative move around $3,200
Gold is holding its own on Tuesday, trading just above $3,200 per troy ounce as it bounces back from earlier losses. While a more upbeat risk sentiment is bolstering the rebound, lingering concerns over a deepening global trade rift have prevented XAU/USD from rallying too aggressively.
WTI stays above $61.00 due to tariff relief hopes, strong Chinese imports
West Texas Intermediate crude Oil price remains stable around $61.10 during Asian trading hours on Tuesday. A potential upside in crude prices is supported by recent comments from US President Donald Trump, who suggested the possibility of new tariff exemptions.
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DOLLAR INDEX, USDX
The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies. These currencies are the Euro (constituting 57.6% of the weighting), Japanese Yen (13.6%), British Pound (11.9%),
Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%). The index started in 1973 -with the absolution of Bretton Woods- with a base of 100.000, and values since then are relative to this base. For example, if the current reading
says 99.800, this means that the dollar has fallen 0.2% since the start of the index (99.800 - 100.000).
US Dollar Index on Wikipedia
Being the Dollar Index a geometrically weighted index and not a trade-weighted one, it is too concentrated in Europe and does not include two of the U.S. top four trading partners Mexico and China. It does not appear to be used by corporates or many asset
managers, like mutual funds, insurance companies, and endowments. It is primarily a speculative vehicle. It's also important to acknowledge that a geometric mean artificially lowers the value of the USD over time.
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE US DOLLAR INDEX
The US Dollar Index news can be seriously affected by the decisions taken by these organizations and people:
- Fed, the Federal Reserve of the United States whose president is Jerome Powell. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
- The US Government: events as administration statements, budget, new laws and regulations or fiscal policy can increase or decrease the value of the Dollar Index.
- The US Treasury Dept that defines its role as “the steward of U.S. economic and financial systems, and as an influential participant in the world economy.”
- US GDP (Gross Domestic Product), the total market value of all final goods and services produced in the United States of America. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the Dollar Index, while a low reading is negative.
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The US Dollar Index
When I write the Online Trading Academy Forex newsletter, I give my opinion about what I believe is happening to the currencies of the world based on the news I hear, the experts I follow, and my personal experiences of the economic cycles I have seen in the past. This fundamental information helps me understand what reports and indicators the economists of the world believe will shape future events.
The Dollar Index – It Makes Sense Until it Closes
Have you watched the US Dollar Index (USDX) Futures contract trade during the day? Do you notice that with each price change the intervals are always a minimum tick of .005? And then at the end of the day when you look at your daily candle of the USDX you see a closing price like 97.197.
A Look at the US Dollar Index
Over the last few months especially, there’s been a lot of focus in the world of Currency Trading upon the state of the US Dollar. No matter what your opinion is of the Greenback, it is still, without question, regarded as the world’s primary reserve currency and holds its weight of recognition across the board.