The U.S. Dollar Index, which measures the greenback’s performance against a basket of six major currencies, climbed yesterday to its highest level since April 11, 2025, reaching 101.98 points. It is currently trading around 101.50. The index has risen approximately 4% from its April 21, 2025 low of 97.92 to yesterday’s peak. However, on a year-to-date basis, the index remains down about 6%.
The primary driver behind this recent dollar strength is the trade agreement reached yesterday between the United States and China in Switzerland. The deal includes a 90-day pause on escalation measures. As part of the agreement, the U.S. will reduce tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on American products from 125% to 10%.
Markets are now closely watching the U.S. Consumer Price Index (CPI) data, set to be released at 4:30 PM UAE time. Expectations are for the April CPI to remain steady at 2.4%. Investors should exercise caution, as any reading above expectations could provide further upward momentum for the dollar index.
Still, a key question remains: can the U.S. dollar continue its upward trajectory, especially given the uncertainties surrounding the U.S. economy, the risk of a potential recession, and the lack of clarity regarding future fiscal and monetary policies?
From a technical perspective, the index has broken above its 20-day moving average, currently at 99.84 points. The next major challenge lies in breaching the 50-day moving average, which stands at 102.08 points. The Relative Strength Index (RSI) is currently at 55, indicating positive momentum. Additionally, the MACD shows the blue MACD line crossing above the orange signal line, further reinforcing the bullish outlook for the U.S. Dollar Index.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
