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>>The US dollar's robust recovery withstands growing trade uncertainty in worldwide foreign exchange markets

The US dollar's robust recovery withstands growing trade uncertainty in worldwide foreign exchange markets

crypthub

about 12 hours ago

Dollar Rebound Amid Trade Tensions

The US Dollar rallied sharply this week, with the Dollar Index rising 1.8% to 105.42 despite heightened trade uncertainty between the US, EU and Asian partners. Analysts had expected the greenback to weaken after recent protectionist signals from G7 nations. Instead, the dollar turned higher across multiple sessions, defying conventional safe‑haven dynamics.

Drivers of Strength

The bounce was fueled by a more hawkish tone from the Federal Reserve, pushing expectations for fewer rate cuts and widening yield gaps with European and Japanese bonds. Strong US manufacturing capacity and a tight labor market reinforced the view of domestic resilience. Multinational treasury flows also repatriated dollars as firms prepared for possible trade disruptions.

Technical Support

Technical indicators confirmed the uplift: the 200‑day moving average held as support, the RSI moved out of oversold territory and a double‑bottom pattern emerged on short‑term charts. These signals attracted short‑covering and fresh buying pressure in dollar futures. Volatility remained modest compared with other majors.

Implications and Market Outlook

The episode challenges the historic link between trade friction and dollar weakness, suggesting that interest‑rate differentials and economic strength now dominate price moves. Investors are re‑evaluating risk models as safe‑haven currencies like the yen and franc lagged. Continued policy divergence is likely to keep the dollar in a favorable position amid ongoing global negotiations.