USD: Focus on consumer confidence – ING

The Dollar Index (DXY) is back above 104 again as European currencies soften a little. The latest reports suggest a US government shutdown this weekend has been averted as the Democrats in the Senate prepare to pass the House bill agreed earlier this week, ING's FX analyst Chris Turner notes.

DXY to trade in a tight range today 

"While that may be seen as an excuse for a mild uptick in US equities, there are much bigger forces in play - such as the path for tariffs and whether subdued US consumer and business sentiment is going to weigh on real activity. Federal Reserve Chair Jerome Powell said that 'sentiment readings have not been a good predictor of consumption growth in recent years'."

"For today, the US focus will therefore be on the 1500CET release of March Consumer sentiment. These readings have fallen quite sharply over the last two months and any further large drop could weigh on the dollar today. However, the bigger reaction here may come next Monday when the February retail sales figure is released. Consensus expects quite a large rebound after January's drop (-0.9% month-on-month headline, -0.5% core). Failure for that rebound to materialise is a downside risk for the dollar."

"Elsewhere, comments on the dollar from Treasury Secretary Scott Bessent gained some attention yesterday. He said that this year's dollar sell off is a 'natural adjustment' after last year's rally. We doubt that means much/anything for the US Treasury's dollar policy and he's just acknowledging the noise/disturbance this 'transition' period is having on the US economy. Ultimately we think Washington would like a weaker dollar, but a global trade war is dollar positive. DXY to trade in a tight range today - perhaps between 103.70 and 104.30."