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The US Dollar eases slightly on Tuesday against major currencies amid ongoing trade war tensions.
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A recent boost from strong Nonfarm Payrolls data and recovering US Treasury yields had previously lifted the Greenback.
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The US Dollar Index climbs back above 103.00, aiming to stabilize and extend its consolidation.
The US Dollar Index (DXY), which measures the USD’s performance against a basket of six major currencies, is trading just above 103.20 on Tuesday, slightly lower as market sentiment shifts toward a risk-on tone.
While the Greenback had seen substantial gains following last Friday’s upbeat Nonfarm Payrolls (NFP) report, ongoing trade war tensions and mixed economic signals are clouding the outlook. With fresh US data on the horizon, the question remains whether the DXY can maintain its recovery.
Economic Data in Focus: NFIB and Market Mood
- The NFIB Business Optimism Index for March was released earlier in the day, showing a reading of 97.4—well below both the forecast of 101.3 and the previous figure of 100.7. This drop in business sentiment, amid tariff uncertainty, may weigh on the Dollar in the near term as investors reassess US economic resilience.
- Later in the day, a US 3-Year Note Auction is scheduled for 17:00 GMT, followed by remarks from Federal Reserve Bank of San Francisco President Mary C. Daly at 18:00 GMT, which could offer additional insights into the Fed’s policy path.
- Markets rebounded on Tuesday, with Japan’s Nikkei and Topix closing more than 6% higher. European and US equities are also posting broad gains above 1%, reflecting a partial recovery from last week’s sell-off.
- According to the CME FedWatch Tool, the odds of a Fed rate cut in May have dropped to 28.6%, down from nearly 50% on Monday. However, a rate cut in June is still heavily priced in, with a 94.5% probability.
- US 10-year Treasury yields have also bounced back, trading around 4.16% after hitting a five-month low of 3.85%. This rebound has cooled immediate expectations for aggressive Fed rate cuts.
US Dollar Index Technical Outlook: Volatility Ahead
The US Dollar Index remains in a volatile phase, and traders should be cautious given the rapid swings. A daily close above 103.18 would signal further bullish momentum, with 104.00 and the 200-day Simple Moving Average (SMA) at 104.86 as the next upside targets.
On the downside, initial support lies at 101.90, which has provided a reliable floor in recent sessions. A decisive break below this level could open the door to a deeper decline toward the key 100.00 psychological mark.
In the short term, the USD’s direction will hinge on economic data and evolving geopolitical tensions, especially around tariffs and Fed policy expectations.
US Dollar Index: Daily Chart
