The U.S. dollar has found support and is looking to move higher after suffering a historically weak start to the year.
USDX – Daily Chart
The USDX has found support at the key level of 97.919 and is now poised for a possible move to the 100.00 level.
If the U.S. dollar can advance further from here then it could weigh on the price of Bitcoin and commodities, such as gold. The greenback has endured its worst start to a year since 1973 after the tariff turmoil.
U.S. President Donald Trump is reportedly seeking higher tariffs on imports from the European Union, which will impact the negotiations ahead of an August 1 deadline for duties to take effect. The Financial Times said that Trump wants a minimum of 15% to 20% added to EU goods in any deal. He has also threatened the bloc with 30% duties from August, alongside sector tariffs on copper, pharmaceuticals, and semiconductors.
That could reignite the drama seen earlier in the year if the Eurozone decides to retaliate.
“We don’t want a trade war, but we don’t know if the U.S. will leave us a choice,” the FT quoted from a senior EU diplomat.
The next issue ahead for the dollar is the ongoing criticism of the Fed Chair Jerome Powell by Trump. He has said that it is “highly unlikely” he will fire Powell and that has supported the dollar in recent days.
Some stubborn inflation in the U.S. has also led traders to push their expectations on rate cuts further down the line. The economic calendar is light for the U.S. and the only high-level release is services and manufacturing PMI late on Thursday. That could allow the dollar a chance to continue its recovery theme early in the week.
Ukraine has said it has offered new peace talks to Russia and headlines related to this could impact the USD and gold.
