US Dollar lifted by Nonfarm Payrolls surprise and Powell’s cautious stance
- DXY climbs near the 103 zone on Friday as strong job numbers offset ongoing tariff uncertainty.
- Fed Chair Powell warns tariffs could lift inflation and dampen growth while hinting at no rush for policy moves.
- Resistance is seen at 103.73 and above; support is near 102.61 as technicals remain largely bearish.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, rises on Friday and is trading near the 103 area following a stronger-than-anticipated Nonfarm Payrolls report. The Greenback's momentum is also shaped by Federal Reserve (Fed) Chairman Jerome Powell’s remarks, where he flagged greater-than-expected inflation risks from tariffs while emphasizing the Fed’s wait-and-see approach. Technically, DXY remains in a bearish structure despite the rebound.
Daily digest market movers: US Dollar recovers as Powell strikes balance
- US Nonfarm Payrolls surged to 228,000 in March, well above the 135,000 forecast and even beating the highest projections.
- Fed Chair Powell acknowledged that tariffs could have a stronger-than-anticipated inflationary and economic impact, though policy changes remain on hold for now.
- He reiterated that inflation is closer to target but still slightly elevated, and the Fed is monitoring uncertainty from federal policies, especially trade.
- Powell stated the Fed’s job is to avoid temporary price hikes turning into persistent inflation, though long-term expectations remain anchored.
- China's retaliation came swiftly, with a 34% tariff on all US imports from April 10, compounding fears of an extended trade conflict.
- Powell also highlighted a slowdown in progress toward the 2% inflation target while noting that the job market remains balanced with low unemployment.
- Surveys indicate a deteriorating sentiment and higher uncertainty amid escalating geopolitical and economic tensions.
Technical analysis
The US Dollar Index (DXY) climbs modestly in Friday’s session, but bearish undertones persist as it hovers around the 103 area. The Moving Average Convergence Divergence (MACD) continues to flash a sell signal, and while the Relative Strength Index (RSI) reads 35.58—within neutral bounds—it reflects a fragile bullish momentum. The 20-day, 100-day, and 200-day Simple Moving Averages (SMA), alongside the 10-day Exponential Moving Average (EMA), all point to a bearish trend. The Ultimate Oscillator and Stochastic %K are also neutral, confirming indecision. On the upside, resistance levels are seen at 103.50, 103.73, and 103.81. Meanwhile, support rests at 102.61, with further pressure likely if that level gives way.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.