US Dollar stronger as Richmond Manufacturing sinks
- The US Dollar bounces ahead of the US trading session on Tuesday after hitting a three-year low on Monday.
- Questions arise if Fed speakers this Tuesday and later this week will defend their Chairman.
- The US Dollar Index stuck under the 100.00 marker as Trump intensifies attacks on Fed Chair Jerome Powell.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is bouncing off a three-year low ahead of the US trading session. Markets got caught by surprise as the US Dollar took a hit during Asian trading hours while European and US markets were trading on limited capacity due to the Easter Monday bank holiday. United States President Donald Trump has shifted his focus now to the Federal Reserve (Fed) and lashed out at its Chairman Jerome Powell, calling him “a major loser" for not lowering interest rates while looking at ways to get rid of the Chairman, putting further downward pressure on the Greenback.
On the economic calendar front, all eyes are on the leading Purchasing Managers Index (PMI) preliminary data for April on Wednesday and the Durable Goods orders on Thursday. For this Tuesday, a slew of Fed speakers are lined up to speak, while the less-important Richmond Fed Manufacturing data for April fell further into contraction than expected.
In US equity markets, the focus will be on the Tesla (TSLA) earnings call after the US closing bell, when CEO Elon Musk could announce his departure date from the Department of Government Efficiency (DOGE).
Daily digest market movers: Richmond Manufacturing sign
- At 13:30 GMT, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, participates in a seminar on economic development at the University of Pennsylvania, focusing on regional growth and financial inclusion.
- At 14:00 GMT, Fed Vice Chair Philip Jefferson gives a speech on "Economic mobility and the Dual Mandate" at the Federal Reserve Bank of Philadelphia Economic Mobility Summit, Philadelphia.
- The Richmond Fed Manufacturing Index for April fell to -16.7, surpassing the expected -15.6, and beating the previous -14.5 contraction. More contraction thus in the Manufacturing sector it seems.
- Minneapolis Fed President Neel Kashkari will speak around 17:40 GMT as he participates in a Q&A at the US Chamber of Commerce Global Summit in Washington DC.
- Closing remarks for this Tuesday around 22:00 GMT from Federal Reserve Bank Governor Adriana Kugler, who gives a speech on "Transmission of Monetary Policy" at the Heller-Hurwicz Economics Institute 2025 Roundtable, Minneapolis.
- After the US closing bell, all eyes will shift to Tesla earnings. Rumors are that Tesla Chairman Elon Musk is set to announce in the call his departure date from the Department of Government Efficiency (DOGE), NBC reports.
- Equities are looking for direction on Tuesday with minor losses in Europe while US equities are up near 2% on average as they try to rebound from Monday’s losses.
- The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in May’s meeting at 10.4% against no changes at 89.6%. The June meeting is still having around 62% chances for a rate cut.
- The US 10-year yields trade around 4.39% after US bonds have been selling off quite substantially over the past few weeks.
US Dollar Index Technical Analysis: Look out for firm rejections on the topside
The US Dollar Index (DXY) is saying goodbye to the 100.00 marker for now. Incurred losses from Monday are being consolidated this Tuesday while the Relative Strength Index (RSI) is penetrating the oversold area. More downside could be rather limited from here as some sort of technical bounce looks likely before the DXY could drop another leg lower.
On the upside, first resistance comes in at 99.58, which could trigger a firm rejection in any recovery attempts. Should Dollar bulls resurface, look for 100.22 with a break back above 100.00 as a bullish signal of their return. A firm recovery would be a return to 101.90, which acted as head-and-shoulders base line since 2023.
On the other hand, the low at 97.73 is very close by and could snap at any moment. Further below, a rather thin technical support comes in at 96.94, before starting to look at the lower levels of this new price range. These would be at 95.25 and 94.56, which would mean fresh lows not seen since 2022.
US Dollar Index: Daily Chart
Dot Plot FAQs
The “Dot Plot” is the popular name of the interest-rate projections by the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed), which implements monetary policy. These are published in the Summary of Economic Projections, a report in which FOMC members also release their individual projections on economic growth, the unemployment rate and inflation for the current year and the next few ones. The document consists of a chart plotting interest-rate projections, with each FOMC member’s forecast represented by a dot. The Fed also adds a table summarizing the range of forecasts and the median for each indicator. This makes it easier for market participants to see how policymakers expect the US economy to perform in the near, medium and long term.
The US Federal Reserve publishes the “Dot Plot” once every other meeting, or in four of the eight yearly scheduled meetings. The Summary of Economic Projections report is published along with the monetary policy decision.
The “Dot Plot” gives a comprehensive insight into the expectations from Federal Reserve (Fed) policymakers. As projections reflect each official’s projection for interest rates at the end of each year, it is considered a key forward-looking indicator. By looking at the “Dot Plot” and comparing the data to current interest-rate levels, market participants can see where policymakers expect rates to head to and the overall direction of monetary policy. As projections are released quarterly, the “Dot Plot” is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.
The most market-moving data in the “Dot Plot” is the projection of the federal funds rate. Any change compared with previous projections is likely to influence the US Dollar (USD) valuation. Generally, if the “Dot Plot” shows that policymakers expect higher interest rates in the near term, this tends to be bullish for USD. Likewise, if projections point to lower rates ahead, the USD is likely to weaken.
Author
Filip Lagaart
FXStreet
Filip Lagaart is a former sales/trader with over 15 years of financial markets expertise under its belt.
