10 Mar 2025

• The US Dollar trades broadly flat on Monday as traders mull the economic situation in the US.  
• Fed Chairman Powell commented on Friday the central bank does not need to make any move right now. 
• The US Dollar Index hangs on to 103.50, though it faces concerns from traders. 
  

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six prominent currencies, is exhibiting a mixed trading pattern on Monday, remaining above the four-month low of 103.50 established on Friday. Market participants are reflecting on recent remarks made by US President Donald Trump during a Fox News interview over the weekend, in which he discussed the state of the US economy. The President indicated that the economy is undergoing a transitional phase, which may involve some challenges, while market sentiment has recently raised concerns about the possibility of a recession in the US.

In terms of economic indicators, attention this week will be directed towards the Consumer Price Index (CPI) data for February, scheduled for release on Wednesday. Additionally, the week is expected to be relatively uneventful regarding the Federal Reserve (Fed), as the central bank has entered its blackout period in advance of the meeting on March 19.

Traders received insights from Federal Reserve Chairman Jerome Powell on Friday evening. Powell indicated that the Fed does not require immediate action while it continues to assess incoming data. He also recognized the increasing economic uncertainties in the United States but emphasized that there is no need to hastily modify policy.

Daily market update: A tranquil beginning to the week  
The week has commenced with a sense of tranquility, characterized by a sparse economic calendar. The only notable event is the US Treasury's auction of 3-month and 6-month bills scheduled for 15:30 GMT.  

In a Fox News interview over the weekend, US President Donald Trump remarked that the economy is undergoing “a period of transition,” reiterating his focus on tariffs and federal job reductions, as reported by Bloomberg.  
Mark Carney, the former Governor of the Bank of Canada (BoC) and the Bank of England (BoE), has emerged victorious in the race to succeed Justin Trudeau as Canada’s new Prime Minister. The incoming Prime Minister has pledged to prevail in the trade conflict with President Trump, according to CNN.  

Equities are experiencing a somber start to the week, with declines observed across the board in China, Europe, and US equity futures ahead of the trading session in the United States.  
The CME Fedwatch Tool indicates a 63.0% probability that interest rates will remain within the current range of 4.25%-4.50% during the May meeting, while the likelihood of lower interest rates in June stands at 85.8%.  
The yield on the US 10-year note is trading around 4.26%, recovering from a near five-month low of 4.10% reached on Tuesday.

US Dollar Index Technical Analysis: Pressured by Concerns Regarding the US Economy

The US Dollar Index (DXY) is experiencing downward pressure and is seeking direction on Monday following recent developments concerning US President Donald Trump over the weekend. Market participants are still deliberating whether the US economy is currently in a recession or is likely to enter one, as President Trump continues to implement tariffs and reciprocal duties by April. If the upcoming US Consumer Price Index (CPI) data indicates a significant increase in inflation later this week, fears of a recession may intensify.

There exists an upside risk at the 104.00 level, which could lead to a strong rejection. Should the bulls manage to circumvent this level, a substantial rally towards the 105.00 mark is anticipated, with the 200-day Simple Moving Average (SMA) positioned at 105.03. A breach of this area would expose several critical resistance levels, including 105.53 and 105.89.

Conversely, the 103.00 level may serve as a bearish target if US yields decline again, with the possibility of reaching 101.90 if the markets further abandon their long-term US Dollar positions.