US President Donald Trump characterised recent US-China discussions in Switzerland as ‘very good’, with Treasury Secretary Scott Bessent noting ‘substantial progress’. New levels of duties are being considered alongside exemptions, as economic stakeholders assess these factors.

The dollar’s recovery, supported by Trump’s changes in trade strategy, contrasts with broader equity market gains. Upcoming US inflation data is pivotal, with expectations for April’s core CPI at 0.3% month-on-month. This may inform pressures on the Federal Reserve’s core PCE measure, though not likely to prompt immediate central bank action.

The Dollar And Market Influences

The dollar remains influenced by varied forces, with potential support around 100.0 in DXY likely amid scrutiny of US-China talks. Early week developments may soften the dollar’s trajectory, though initial support is anticipated to emerge as negotiations progress further.

This summary outlines recent trade dialogues between the United States and China, with Trump describing the conversations as productive. Bessent backed this up, suggesting there had been concrete advancements. While they weigh the option of adjusting tariffs—either increasing them or granting exemptions—market participants are examining in real time how these decisions might impact broader financial dynamics.

The US dollar, which had been on the back foot for a while, is now attempting a modest revival. Much of that strength is being attributed to adjustments in Washington’s approach to international commerce. At the same time, American stocks are ticking higher, indicating not everything follows the same rhythm. That divergence is adding some unpredictability, especially for those focusing on cross-asset correlation strategies.

We’re now focused on this week’s inflation release, particularly the core CPI for April. Analysts are anticipating a 0.3% gain over the previous month. That pace would still feed into the Federal Reserve’s preferred inflation gauge—the core PCE—but probably won’t be enough to shift policy gears any time soon.

Trading And Positioning Dynamics

From a trading point of view, the dollar index (DXY) hovers near a region where support could firm up—specifically around the 100.0 mark. However, early moves during the week could push the dollar slightly lower before any base forms. That short-term slippage might offer opportunities for re-entry, should the talks between Washington and Beijing continue to lean constructive.

Given the mix of policy noise and economic prints, we should expect more volatility around inflation-linked positions. What really matters is the trajectory and persistence of inflation surprises, more so than a single data point. If core inflation stays sticky, we’ll need to account for forward yields staying elevated, at least on the US side.

As for positioning, the taktical bias may require nimble adjustments. With early-week softness likely, especially if there’s any headline fatigue from the trade discussions, fading minor dollar rallies close to resistance areas could make sense. But once more concrete signs of resolution appear, quicker reversals may come into play.

In terms of scenario setups, we’re watching the tone of policymaker comments closely. If the perceived progress in trade relations holds and is backed by pressure in inflation data, the timing of the next directional move in rates markets could slip further out. This would, in most cases, reduce the likelihood of any abrupt policy change. Until then, skewing trades toward mean-reversion setups rather than momentum chasing might offer better entry points.

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