DXY: Ongoing tensions and economic figures continue to bolster the USD – ING

Dollar Maintains Strength Amid Ongoing Geopolitical Uncertainty

According to Chris Turner from ING, the US Dollar continues to find support as instability in the Middle East endures. Meanwhile, America’s trading partners are taking steps such as currency intervention, stricter monetary policies, or regulatory actions to protect their own currencies from further depreciation. Turner points out that robust US employment data and a growing gap in the EUR/USD cross-currency basis could help keep the DXY index above 100, reinforcing the Dollar’s position throughout the week.

Geopolitical Tensions and Economic Indicators Bolster the Dollar

Turner observes that the Dollar remains in demand, while countries facing currency weakness are exploring various strategies to counteract the decline.

He also notes the importance of monitoring the cross-currency basis swap for the Dollar, particularly for any signs of tightening in Dollar funding. A recent modest widening in the short-term EUR/USD basis could signal further Dollar gains and increased pressure on risk-sensitive assets if the trend accelerates.

This week, attention turns to US labor market data, including JOLTS job openings, ADP employment figures, and the March payroll report. The market will closely watch Friday’s NFP release, with expectations set at 60,000 new jobs and an unemployment rate of 4.4%. Strong results may prompt investors to anticipate further Federal Reserve tightening in response to energy market shocks, while any unexpected weakness could weigh on the Dollar.

Additionally, investors should be alert for remarks from Federal Reserve Chair Jerome Powell, who is scheduled to participate in a moderated discussion at Harvard today at 4:30pm CET.

Currently, the DXY index is trading above the 100 mark, and another attempt to break through resistance at 100.25/50 appears likely in the coming days.

(This content was produced with the assistance of artificial intelligence and subsequently reviewed by an editor.)