Key Points:
- USDX closed at 103.911, recovering from an intraday low of 103.404, signaling consolidation rather than a steep drop.
- Treasury bond volatility and widening corporate bond spreads continue to pose risks to dollar stability.
USDX Stabilises Amid Market Volatility
The US Dollar Index (USDX) has rebounded from its session low of 103.404, closing at 103.911 after earlier dipping near its weakest level since early March. Contrary to expectations of a deeper plunge, the index has found support, suggesting a potential pause in its downward momentum.
Despite continued uncertainty over US trade policies, the greenback has held steady, resisting a sharper decline. Earlier reports indicated the USDX had hit a four-month low of 103.85, but today’s price action suggests that buyers have stepped in to prevent further losses.
Treasuries serve as global financial collateral, and rising volatility in the US bond market could lead to tighter liquidity conditions.
Additionally, corporate bond spreads have widened over the past three weeks, often a precursor to market stress. Historically, such movements have coincided with turning points for risk assets, including Bitcoin.
Market Analysis
The USDX chart analysis indicates that maintaining a level above 103.90 could suggest short-term market stability, potentially averting further declines. Conversely, a drop below the 103.40 mark might reintroduce selling pressure, particularly if inflation worries come to the forefront again.
Picture: USDX edges higher, testing resistance near 104.00, as seen on the VT Markets app
The broader market sentiment is marked by caution, as traders remain vigilant about the Federal Reserve’s policy cues, which will likely dictate the market’s next moves. The interplay between these levels and external economic signals will be critical in shaping the dollar’s trajectory in the coming sessions.
While some analysts see a declining USDX as a tailwind for risk assets, a sudden rebound could disrupt bullish momentum in equities and cryptocurrencies. The coming days will be pivotal in determining whether the dollar resumes its downtrend or finds firmer footing.
