Insights 
VT 
The US Dollar Index (DXY), which measures the US Dollar against other currencies, reversed sharply on Friday after nearing a one-month high of 100.86. The trade disappointment between the US and the UK impacted the Greenback, with market attention shifting to the US-China trade discussions in Switzerland.
US tariffs on UK products remain at 10%, while US-China talks are expected to be tense. US President suggested reducing tariffs on Chinese goods if cooperation improves. Chinese refineries imported 11.7 million barrels per day in April, partly due to low oil prices, while US sanctions on Chinese refineries for buying Iranian oil complicate the situation.
The Us Dollar Index Performance
The US Dollar Index is down over 0.30%, trading around the 100.00 level. Technical indicators show neutral momentum, while short-term support is provided by the 20-day Simple Moving Average (SMA) at 99.64. Longer-term resistance is firm with 100-day and 200-day SMAs still indicating selling pressure.
The Federal Reserve (Fed) is a key factor in the US Dollar’s value, primarily through its monetary policy. Quantitative easing usually weakens the currency, while quantitative tightening supports it. The US Dollar remains the most traded currency, making up over 88% of global foreign exchange turnover.
The earlier section identified a notable shift in the Dollar’s strength last Friday, with the currency pulling back after testing a peak near 100.86. This move was not arbitrary. There was a clear driver in the form of jolted trade expectations between Washington and London, which put downward weight on the Greenback as it hovered around that psychological 100.00 level.
In the days ahead, traders should keep an eye on Switzerland. Talks between Washington and Beijing are due to continue, and markets seem jittery. Tension is expected—not just in rhetoric but in the way policymakers interpret recent moves in commodities and energy. We shouldn’t ignore the substantial volume of oil imported by Chinese refiners during April—over 11 million barrels a day—because that buying was helped along by falling crude prices. Although high activity sounds encouraging at first glance, the layering effect of sanctions, particularly those aimed at Iranian-linked purchases, brings new uncertainty into pricing assumptions. This could very well introduce fresh demand for defensive Dollar positioning, especially if tempers rise during negotiations.
Technical Analysis And Market Sentiment
When we glance at the technicals, there’s more than one reason to be cautious. Although momentum isn’t pushing too hard in either direction—neutral at best—the daily charts show support holding at the 20-day SMA, right around 99.64. That said, longer-term sentiment is still leaning slightly negative, evidenced by both the 100-day and 200-day moving averages pointing lower. What this tells us is simple: the short-term narrative might be uncertain, but broader pressure hasn’t yet lifted.
Our stance becomes more grounded when we consider the role monetary policy continues to play. The US central bank exercises strong influence on the strength of the Dollar. Moving from quantitative easing toward tightening generally props up the currency. For now, we’ve seen restraint from the Fed, and until that changes or becomes more clearly directional, volatility in short-term pricing remains likely.
More importantly for those watching funding costs or hedging exposure, liquidity patterns ahead of next week’s economic releases can trigger rapid changes. Equity correlations are loosening slightly, and that leaves room for dollar-driven strategies to gain without needing large moves in indices.
We have to monitor rate expectations through bond pricing, especially since yield differentials have been edging closer to inflection points. Any tilt—hawkish or dovish—will reroute flow into the relevant duration buckets, and by extension weigh on forward rate agreements.
There’s also merit in not overlooking the FX volume dominance: the US Dollar is involved in nearly nine out of every ten trades globally. So even a modest policy talk change or headline leak can ripple far wider than the original source.
For now, staying nimble with positioning and focusing on the higher-frequency data cycles might serve better than locking in persistent directional views. Carefully watching SMA zones and reassessing exposure as tariff talks unfold should remain at the core of every strategy in the coming sessions.
