- Trump criticizes the Fed for its hawkish monetary policy outlook.
- Fed's Bullard warns over yield curve inversion risks.
- US Dollar Index turns negative for the week in the NA session.
The US Dollar Index, which tracks the greenback against a basket of six major currencies, came under pressure in the second half the day on Friday and turned negative on the week. After touching a daily low at 94.30, the index made a small recovery and was last seen at 94.45, where it was still down 0.75% on the day.
Just when it looked like the index was about to make its first daily close of the week above the critical 95 handle on Thursday, US President Donald Trump's remarks on the monetary policy during an interview with CNBC triggered a sell-off. Although it looked like the negative impact of Trump's comments on the USD was starting to fade away on Friday, the US Dollar Index, once again, turned south as Trump went on to Twitter to remind investors about his views on the Fed's policy outlook.
Claiming that the U.S. was at a disadvantage because rival economies like the EU and China were manipulating their currencies by keeping the interest rates low, Trump argued that higher rates and a stronger dollar were taking away their competitive edge.
"The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?" Trump concluded.
Right around the time when Trump tweeted out these views, St. Louis Fed President James Bullard crossed the news wires saying that the Fed should hold off raising rates further as the flattening yield curve was pointing to a slow down in the economic expansion and put extra weight on the buck.
Furthermore, the lack of macroeconomic data releases from the U.S. that could change the market mood on Friday allowed these statements to continue to drive the market's USD valuation.
Technical levels to consider
The initial support for the index aligns at 94.25 (50-DMA) ahead of 93.70 (Jul. 9 low) and 93.15 (Jun. 14 low). On the upside, resistances could be seen at 94.65 (20-DMA), 95 (psychological level) and 95.65 (Jul. 19 high).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.