US Dollar sees volatility on US tariff disputes with China
- DXY trades around the 103.00 zone on Tuesday as bulls attempt to extend Friday’s recovery.
- Sentiment was lifted after US Trade Representative Greer noted ongoing tariff talks with around 50 countries.
- Key resistance for the US Dollar Index aligns near 103.70 with downside support forming close to 102.70.
The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is trading near the 103.00 region during Tuesday’s session. Momentum picked up after upbeat labor market data last week, helping the index rebound from recent lows. Investors welcomed remarks from US Trade Representative (USTR) Jamieson Greer, who told the Senate Finance Committee that the US is engaged in tariff discussions with nearly 50 countries.
However, selling pressure resumed after the US confirmed additional tariffs to go into effect on April 9 against China.
Daily digest market movers: US Dollar sees choppy session on trade dialogue
- USTR Greer told lawmakers that the US is actively working with dozens of countries on tariff negotiations despite US tariffs expected to begin imminently.
- Optimism over trade momentum and hints at market access expansion for agriculture supported sentiment, although no clear timeline was offered.
- Despite engagement from several trading partners, Greer noted China remains resistant to negotiations, widening the rift between Washington and Beijing.
- In line with that, Trump Press Secretary Karoline Leavitt said as retaliation for China's applying 34% duties on US exports the US would add another 50% tariff to Chinese goods.
- Treasury Secretary Scott Bessent confirmed that President Trump will directly participate in future talks, while European Commission President von der Leyen warned of potential retaliation if no resolution is reached.
Technical analysis
The US Dollar Index remains within a narrow range near 103.00, reflecting cautious market behavior. The Moving Average Convergence Divergence (MACD) shows a buy signal, while the Relative Strength Index (RSI) at 41.87 and Bull Bear Power at -0.98 reflect a neutral stance.
Despite this, bearish signals persist from the 20-day, 100-day, and 200-day Simple Moving Averages (SMA) all pointing lower. Similarly, the 10-day Exponential Moving Average (EMA) and SMA reinforce the downward tilt.
Key resistance levels to watch include 103.48, 103.66 and 103.71, while immediate support stands at 102.73. A daily close above 103.18 remains crucial for bulls to regain control.
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.
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