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3 June 2025,07:18

Daily Market Analysis

Dollar Slips Below 100 as Trade Tensions Resurface; Eyes on Powell and ISM PMI

3 June 2025, 07:18

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Key Takeaways:

*Market uncertainties surrounding White House trade policy weakened the dollar’s strength.

*Market eyes on today’s U.S. PMI reading to gauge the strength of the dollar.

Market Summary:

The U.S. dollar extended its losing streak, falling more than 0.5% last Thursday and continuing to slide at the start of the week, with the Dollar Index now teetering near a critical support level at 99.15. The greenback’s weakness comes amid renewed trade tensions sparked by former President Donald Trump’s pledge to raise tariffs on imported steel and aluminum by 100%, rekindling fears of protectionist policies that could weigh on economic momentum.

Investor sentiment toward the dollar has been further dampened as the DXY slips below the psychologically significant 100.00 mark, reflecting broader uncertainty around the U.S. policy outlook. The sharp shift in market tone suggests waning confidence in the dollar’s near-term trajectory as geopolitical and trade-related risks mount.

Attention now turns to key economic data and central bank commentary. The ISM Manufacturing PMI due later today will offer fresh insight into the health of the U.S. economy—any upside surprise could provide temporary relief for the dollar. Meanwhile, Fed Chair Jerome Powell is also scheduled to speak. A hawkish tone could help stabilize the greenback and provide a counterweight to the prevailing bearish sentiment.

With the dollar trading near multi-week lows and key macro events on the horizon, volatility is expected to remain elevated in the sessions ahead.

Technical Analysis

Dollar_,index, 4H:

The U.S. dollar briefly broke out of its previous downtrend channel last week, but failed to sustain these gains as the Dollar Index (DXY) declined by more than 0.5%. The index has now retreated to test a critical support level near 99.15, where a confirmed break below this threshold would suggest increasing bearish momentum in the near term.

Technical indicators show mixed signals, with the Relative Strength Index (RSI) crossing below the neutral 50 level from above, indicating weakening upward momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) continues to fluctuate near the zero line, reflecting market indecision and a lack of clear directional bias at current levels.

This technical configuration presents a cautious outlook for the dollar, with traders likely to monitor the 99.15 support level closely for potential breakout or reversal signals in the coming sessions. The convergence of these technical factors at a key price level suggests the potential for increased volatility as market participants assess the dollar’s next directional move.

Resistance Levels: 100.30, 101.90

Support Levels: 98.10, 96.55

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