Facts
- Tariffs on steel and aluminum will be raised from 25% to 50%, Donald Trump announced on Saturday via social media. The new rate is set to take effect on Wednesday
- The U.S. administration plans to expand restrictions on the Chinese technology sector
- The dollar index is testing a key support level for the third time
Recommendation
Short position at market price
- TP: 97.000
- SL: 100.500
Opinion
Renewed fears of an escalation in the U.S.-China trade war are putting pressure on the U.S. dollar. China’s Ministry of Commerce accused the Trump administration of violating prior agreements, while firmly declaring its readiness to defend its interests. The situation is further strained by the lack of progress in negotiations – according to Treasury Secretary Bessent, talks with Beijing have stalled, while the U.S. imposes more export restrictions and prepares new tariff mechanisms. This deepens uncertainty, negatively impacts investor sentiment, and weakens Asian markets in the first session after the weekend.
Additional pressure on the USD comes from the escalating political conflict between Donald Trump and Fed Chair Jerome Powell. Although both sides met at the White House last week, the differences in their approach to monetary policy remain stark – Trump criticizes the lack of rate cuts, while the Fed maintains its stance of independence and data-driven decision-making.
Moreover, from a technical standpoint, the dollar is once again testing support around the 98.700 level. This is already the third attempt to break below this line since the trade war began in early April. A sustained breakdown could lead to further declines toward the 97 level and beyond. We recommend opening a short position at market price with a simultaneous stop loss order to minimize potential risk.
Methodology
The recommendation was based on an analysis of geopolitical relations, including the current trade situation between the United States and its key partners. Additionally, we took into account technical aspects of the USDIDX index chart. Target levels were determined using classic support and resistance levels. You can read more about these methods here
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