{"id":22746,"date":"2025-05-21T06:34:55","date_gmt":"2025-05-21T06:34:55","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=22746"},"modified":"2025-05-21T06:34:55","modified_gmt":"2025-05-21T06:34:55","slug":"usdx-dips-as-trade-drift-undermines-confidence","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/usdx-dips-as-trade-drift-undermines-confidence\/","title":{"rendered":"USDX Dips as Trade Drift Undermines Confidence"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/usd1-1024x559.png\" alt=\"\" class=\"wp-image-16968\"\/><\/figure>\n\n\n\n<p><strong>Key Points:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>USD Index (USDX) falls 0.38% to 99.59, now down 1.3% over two days<\/li>\n\n\n\n<li>Trump\u2019s tax bill fails to unify GOP support, raising deficit concerns.<\/li>\n\n\n\n<li>G7 meetings stir speculation about US preference for a weaker dollar.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\"\/>\n\n\n\n<p>The U.S. dollar continued its retreat on Wednesday, breaking below 99.50 for the first time this month as traders reassessed the currency\u2019s resilience in light of growing fiscal risks, cooling trade momentum, and political gridlock in Washington.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Tariffs unexpectedly devaluing the US dollar \u2014 and in turn boosting corporate earnings \u2014 was one of the few bright spots of the first-quarter earnings season in North America <a href=\"https:\/\/t.co\/GReBFYtreS\">https:\/\/t.co\/GReBFYtreS<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1924804432744611853?ref_src=twsrc%5Etfw\">May 20, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>USDX fell to an intraday low of 99.404 after opening at 100.281, extending its two-day slump to 1.3%. The slide came after President Trump <a href=\"https:\/\/t.co\/m6ZN7jgKVY\" target=\"_blank\" rel=\"noopener\" title=\"\">failed to secure Republican consensus<\/a> for his sweeping tax bill, which nonpartisan analysts estimate would add $3 to $5 trillion to the national debt over the next decade.<\/p>\n\n\n\n<p>Markets are also eyeing the <a href=\"https:\/\/t.co\/HeAo2kDoN1\" target=\"_blank\" rel=\"noopener\" title=\"\">G7 finance minister meetings<\/a> in Canada, where officials from major economies are expected to quietly raise concerns about U.S. currency direction. Traders worry Washington may tacitly endorse dollar weakness as a tool to boost competitiveness while inflation and growth remain tepid.<\/p>\n\n\n\n<p>Adding to the bearish tone, the Moody\u2019s downgrade of U.S. sovereign credit on Friday\u2014while lightly absorbed by markets\u2014has contributed to a broader <a href=\"https:\/\/t.co\/BHPkNgWIKC\" target=\"_blank\" rel=\"noopener\" title=\"\">reassessment of the dollar\u2019s role as a safe-haven asset<\/a>.<\/p>\n\n\n\n<p>Fed officials, meanwhile, are keeping to a cautious path. Several policymakers reiterated on Tuesday that trade uncertainty and fiscal headwinds warrant a &#8220;wait-and-see&#8221; approach, reinforcing dovish expectations and limiting support for the greenback.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>The USD Index (USDX) continues its decline, with price action forming a clear downtrend on the 15-minute chart. After opening around <strong>100.281<\/strong>, the index has dropped steadily, closing at <strong>99.429<\/strong> and marking a session low of <strong>99.404<\/strong>. This represents a significant intraday move, with the MACD histogram deep in bearish territory and the signal line widening, confirming ongoing downward momentum.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/image-23-1024x438.jpg\" alt=\"\" class=\"wp-image-22747\"\/><\/figure>\n\n\n\n<p class=\"has-text-align-center\"><em>Picture: USDX dips below 99.50, eyes deeper support as bearish momentum builds below key moving averages, as seen on the <a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\" target=\"_blank\" rel=\"noopener\" title=\"\">VT Markets app<\/a><\/em><\/p>\n\n\n\n<p>The moving averages (5, 10, 30) are all sloping downward and remain above the current price, reinforcing bearish control. Attempts at recovery have been shallow and short-lived, with sellers stepping in at every lower high. The breakdown below <strong>99.600<\/strong>\u2014a minor support level\u2014further increases downside pressure.<\/p>\n\n\n\n<p>With no immediate signs of reversal and MACD still trending lower, the index may retest <strong>99.200<\/strong> next. A break below this level could extend losses toward <strong>98.900<\/strong>, while any bounce would need to clear <strong>99.800<\/strong> to neutralise the trend.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Forecast<\/h2>\n\n\n\n<p>With inflation concerns giving way to policy uncertainty and budget strain, the dollar may remain under pressure in the near term. While recession risks have eased, <a href=\"https:\/\/t.co\/kEk5Dqm9yQ\" target=\"_blank\" rel=\"noopener\" title=\"\">rising Treasury yields<\/a> and growing fiscal imbalances complicate the longer-term outlook. If the tax bill continues to falter in Congress and <a href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/south-korea-china-japan-agree-promote-regional-trade-trump-tariffs-loom-2025-03-30\/\" target=\"_blank\" rel=\"noopener\" title=\"\">trade negotiations with Tokyo and Seoul<\/a> remain stagnant, USDX could retest support near 99.00. Markets await UK CPI data and Thursday\u2019s U.S. jobless claims for the next directional cues.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\">Create your live VT Markets account<\/a> and <a href=\"https:\/\/myaccount.vtmarkets.com\/login?_gl=1*1azgbap*_gcl_au*NjE5NTE3MjY4LjE3NDQ2MDA3NDI.*_ga*MTY4OTgwNTU5Mi4xNzM2NzQ2MTgy*_ga_J26NL1ZVX7*czE3NDQ5NDQ0NTYkbzEyMCRnMCR0MTc0NDk0NDQ1NiRqNjAkbDAkaDA.\">start trading<\/a> now.<\/strong> <\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The greenback slides to 99.429 as traders weigh fiscal uncertainty, Moody\u2019s downgrade, and stalled global negotiations. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":64,"featured_media":16968,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[9,11],"class_list":["post-22746","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-dollar","tag-indices"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/22746","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=22746"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/22746\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16968"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=22746"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=22746"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=22746"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}