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The DXY is entrenched in a bearish trend, trading below both its 50-day (104.052) and 200-day (104.598) moving averages. While some technical traders view current levels as “oversold,” setting the stage for a potential relief rally, the next downside target at 97.685 is within reach if political risk persists. Resistance is noted at 99.578.
Markets are increasingly pricing in a possible Fed leadership change or policy shift under Trump’s influence, despite Powell’s assertion that he would not resign voluntarily. The legality of a presidential removal of a Fed chair remains unclear, but the uncertainty is enough to spook dollar bulls.
IMF Downgrades Underscore Growth Headwinds
The International Monetary Fund slashed its 2025 US growth forecast to 1.8%, down 0.9 percentage points from January, citing tariff-related shocks. The April 2 “reciprocal tariffs” announcement by the White House has already shaved 9% off the S&P 500 and spurred retaliatory moves from trading partners.
Inflation expectations have also been revised higher, with US headline inflation forecasted above 2%, driven by stubborn service-sector pricing and the cost impact of tariffs. IMF officials noted that tariffs could weigh on US productivity and, over time, pressure the dollar lower in real terms.
Treasury Market Signals Caution
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