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The trade war cools down signal detonates the market, the US dollar index rises, the Fed's next move becomes key
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: The signal of the trade war cooling detonates the market, the US dollar index rises, and the Federal Reserve's next move becomes the key." Hope it will be helpful to you! The original content is as follows:
On Wednesday, the US dollar index rose slightly, the US dollar index rose 0.7% on Tuesday, closing at 98.97. In the early trading of the Asian market on Wednesday, the US dollar index continued its rebound trend, reaching a high of 99.89, a new high in the past week, an increase of about 0.93%, making gold more expensive for holders of other currencies. Traders will also look at the speeches of several Fed officials later this week, hoping to find clues to future monetary policy as people worry about the Fed’s independence. This trading day will also release the initial value of the euro zone and the US SPGI manufacturing PMI in April. Investors also need to pay attention to the news related to the geopolitical situation in Russia and Ukraine.
Analysis of major currencies
U.S. dollar: As of press time, the US dollar index hovers around 99.39. The US dollar index (DXY) has difficulty continuing to rebound in trading on Tuesday, hovering in the 98.50 area, after a slight rebound from the three-year low of 98.01. The rebound occurred as markets reopened after the Easter holiday, and the market reassessed the broader macro environment. However, market concerns about the Fed's autonomy have resurged due to President Trump's continued attack on Fed Chairman Powell, limiting the attempt to rise. Technically, the Relative Strength Index (RSI) is 25.38, showing a potential oversold rebound signal. Similarly, Williams percentage range is ?91.15, providing a buy signal, which remains neutral despite short-term oscillating indicators such as stochastic RSI fast. Momentum continues to be biased towards the seller. MACD is still in a sell mode, and the key moving average further reinforces this bias. The instant support is at 98.33. If it falls below this level, the 97.73 area may be exposed again. The upper barrierThe force levels are 100.01, 100.17 and 101.30, all of which are the near-term resistance levels. Although short-term indicators suggest a rebound, the overall trend remains fragile despite ongoing political and economic tensions not being resolved.
1. The EU filed an appeal and arbitration for the case of China-Europe and related WTO disputes. The Ministry of xmtraders.commerce responded
Head of the Treaty and Legal Department of the Ministry of xmtraders.commerce: China has always attached great importance to intellectual property protection and achievementsIt is obvious to all. China is pleased to see that the WTO expert group supports China's propositions. China has received an appeal request from the European side and will handle it in accordance with relevant MPIA rules to safeguard its legitimate rights and interests. At the same time, I would like to point out that MPIA, as a member of the WTO, maintains the mechanism arrangements for the operation of the dispute settlement mechanism, will help maintain the stability and predictability of the multilateral trading system. China will work with other MPIA participants to jointly promote the effective implementation of MPIA and firmly safeguard the rules-based multilateral trading system.
2. Trump: Unintentional fire Powell called for the Fed to cut interest rates
U.S. President Trump said at the inauguration ceremony of SEC Atkins on Tuesday local time that he had no intention of firing Fed Chairman Powell, although he was disappointed that the Fed did not cut interest rates faster. "Never," Trump told reporters, "the media always messed up things. I don't plan to fire him. I want to see him be more aggressive in the idea of lowering interest rates." Trump said, "Grocery prices have fallen, everything is falling. The only thing that hasn't dropped but hasn't risen much is interest rates." Trump said, "We think the Fed should lower interest rates, and now is the perfect time. We hope our chairman can (cut interest rates) early or on time, rather than being late." Trump also said that the stock market has risen well.
3. White House Press Secretary: The US government will respond to Harvard University lawsuit in court
On April 22 local time, the US White House Press Secretary said that Harvard University is at risk of losing federal funds, and the US government will respond to Harvard University lawsuit in court. Harvard University in the United States said on the 21st that it had filed a federal lawsuit against the Trump administration, claiming that it freezes billions of dollars of federal funds, illegally undermining the school's academic independence and infringing on the school's constitutional rights. The president of Harvard said in a statement that the freezing of funds is illegal, which is beyond the government's authority. It is reported that the U.S. government agencies mentioned by Harvard University in the lawsuit include the Department of Education, the Department of Health and Human Services, the Department of Justice, the Department of Energy and the General Affairs Administration.
4. Goldman Sachs expects U.S. economic data to weaken this summer
Goldman Sachs economists predict that U.S. GDP in the fourth quarter will only increase by 0.5% xmtraders.compared with the fourth quarter of 2024 due to pressure on the economy due to tariffs and policy uncertainties. Currently, business and consumer surveys show a slowdown in the economy, but official economic data have not shown that sign. They reasoned that economic indicators may show a recession more clearly starting in mid-to-late summer. "The evolution of data in recent weeks is consistent with the previous 'event-driven' growth slowdown. However, it is too early to draw strong conclusions from the current limited data."
5. The IMF lowered its UK economic growth forecast but significantly raised its inflation expectations this year
The International Monetary Fund (IMF) on Tuesday lowered its 2025 economic growth forecast for the UK, which exceeded that of other major European economies. IMF says 2025The UK's economic growth rate is still expected to surpass France, Italy and Germany in the year. But the IMF lowered its forecast for UK economic growth to 1.1% from 1.6% in January, a drop of more than the other three major European economies, but the latest forecast is still higher than the government budget agency's forecast for growth of 1.0% and the Bank of England's forecast for growth of 0.75%. The IMF lowered its forecast for UK's 2026 economic growth to 1.4% from the previous 1.5%. Despite the bleak outlook, the IMF has raised its UK inflation forecast this year to 3.1% from 2.4% in January. The IMF said that the upward adjustment of inflation estimates "mainly reflects the factors of one-time regulatory price adjustment."
Institutional View
1. The most accurate forecaster Marinov: The dollar's decline is expected to ease
A best-performing forecaster said that although the global trade war has shaken the dollar's position as a safe-haven asset and has led to the dollar's worst start in the year in at least two decades, the dollar's decline may slow this quarter. Valentin Marinov, head of G-10 foreign exchange strategy at Oriental Bank, said that the rotation trend of tariffs causing capital outflows from US assets remains the main downward risk this year. Bloomberg rankings show that Marinov's forecast for major currencies in the first quarter is the most accurate.
2. Bank of America: The coordinated trend of the euro and the yen is about to end. It is recommended to go long. The euro and the yen are the two best-performing developed market currencies this year, and both appreciated by about 12% against the US dollar. Bank of America analysts believe that the synergistic trend of the two currencies may change, as the yen rises are more fragile than the euro, so they recommend buying one-year call options for the euro/yen. Reasons include: 1) The speculative positions of the euro and yen are both large net long positions, but the long positions of the yen are even more tense, leaving room for the currency pair to rebound. 2) Part of the reason for the tight position is that the market expects the US-Japan exchange rate agreement to further strengthen the yen. However, Bank of America believes that the United States and Japan are more likely to reach a trade agreement that does not include exchange rate terms. 3) This year, regardless of the market environment, the euro has strengthened a lot, and the yen has only appreciated significantly when investors firmly avoid risks and/or pay attention to the Fed’s easing policy, but weakened in other environments. 4) The good news of Germany's fiscal expansion boosted the euro. Japan has much more room to increase spending.
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