- The US Dollar trades back to flat, erasing earlier bounce after Bessent’s comments at the White House.
- The Trump administration labels Amazon as hostile after the company decided to communicate tariff impact on products
- The US Dollar Index is still capped below the 100.00 round level, trading near 99.40 on Tuesday.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is having a knee jerk reaction on the back of comments from United States (US) Treasury Secretary Scott Bessent and White House Press Secretary Karoline Leavitt. During a Q&A at the White House Leavitt stepped in to take over from Bessent on a question around Amazon, that will publish the tariff impact on prices from goods it is selling on its website. Representative Leavitt said she just got off the phone with President Donald Trump and that this move by Amazon is considered hostile and is political motivated, Bloomberg Television reported. Meanwhile markets already got disappointed by Secretary Bessent as apparently no trade deals are to be announced, and will take several more weeks before done.
On the economic calendar front, there is some lighter data ahead on Tuesday, with the central theme on the JOLTS Job Openings report for March. Although this is backward-looking, before US tariffs were implemented, it could already give a sentiment if US companies were preparing for an impact and reduced their job hiring activity. Besides that, the preliminary US Goods Trade Balance for March saw a further deterioration of its deficit.
Daily digest market movers: Lashing out at Amazon
- Sentiment tanked during the White House press conference where both Bessent and Leavitt spoke to reports. The main shocker came after Leavitt said that she just got off the phone with President Trump and that off now, the White House labels Amazon as hostile and that showing tariffs on each product is a hostile and political act.
- The preliminary US Goods Trade Balance for March saw a wider deficit, at $162 billion, coming from the previous deficit at $147 billion.
- Preliminary Wholesale Inventories for March came in at 0.5%, below the expected 0.7% and matching the 0.5% revised number from February.
- The February House Price Index fell to only a monthly 0.1% increase, missing the 0.3% estimate and from a revised 0.3% in February.
- At 14:00 GMT, the JOLTS Job Openings report for March is expected to contract further to 7.5 million, coming from 7.568 million previously. The Consumer Confidence for April is also due, though no forecast is available.
- US equity markets dip on the Amazon comment from the White House and are dragging European equities lower as well, though still in the green. US futures are in the red ahead of the opening bell.
- The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in the May’s meeting stands at 8.9% against a 91.1% probability of no change. The June meeting sees a 62.6% chance of a rate cut.
- The US 10-year yields trade around 4.21%, ticking a bit lower with traders slowly but surely buying back into US bonds.
US Dollar Index Technical Analysis: Another delay in deals while sentiment sours
The US Dollar Index (DXY) is not going anywhere as traders keep their powder dry for the US key economic data later this week. Meanwhile some geopolitical headlines on easing tariffs are off-setted by headlines from China or other countries in response to the Trump administration. When looking at US data, the Dallas Fed Manufacturing survey could be the first real sign that the US economic performance will start to deteriorate, calling for quick interest rate cuts from the Fed, and a weaker US Dollar before US economic numbers recover again.
On the upside, the DXY’s first resistance comes in at 100.22, which supported the DXY back in September 2024, with a break back above the 100.00 round level as a bullish signal. A firm recovery would be a return to 101.90, which acted as a pivotal level throughout December 2023 and again as a base for the inverted head-and-shoulders formation during the summer of 2024.
On the other hand, the 97.73 support could quickly be tested on any substantial bearish headline. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.
US Dollar Index: Daily Chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
