The U.S. Dollar strengthened sharply on Tuesday as global markets reacted positively to news that the U.S. and China agreed to temporarily reduce tariffs—fueling a bullish trend in the Dollar Index and shifting momentum across major forex pairs.
🔑 Key Highlights:
- EUR/USD pulled back near 1.1100 amid tariff de-escalation headlines.
- USD/CAD edged higher toward 1.4000 due to weakness in commodities.
- USD/JPY surged as U.S. Treasury yields rose to new multi-week highs.
- GBP/USD slipped as overall dollar strength dominated currency markets.
💹 U.S. Dollar Index (DXY) Analysis: Eyes 103.50 After Tariff Relief
The U.S. Dollar Index (DXY) rallied after Washington and Beijing agreed to reduce tariffs for a 90-day period—an encouraging signal for global trade. U.S. tariffs on Chinese goods will drop from 145% to 30%, while China will lower tariffs on American imports from 125% to 10%.
- Current Resistance: 101.40 – 101.60
- Next Bullish Target: 103.30 – 103.50
💶 EUR/USD Forecast: Pressured Near Key Support
EUR/USD came under selling pressure as the market digested tariff news. The pair is hovering near the critical 1.1110 – 1.1130 support zone.
- A breakdown could push the pair to 1.0900 – 1.0920.
- RSI signals oversold conditions, suggesting a potential rebound.
💷 GBP/USD Forecast: Weighed Down by Dollar Strength
GBP/USD is losing ground as demand for the U.S. Dollar grows. If the pair closes below 1.3200, a drop toward 1.3000 – 1.3020 may be on the cards.
🇨🇦 USD/CAD Forecast: Breakout Toward 1.4080?
USD/CAD continues to climb as falling silver and oil prices weaken commodity-linked currencies. The pair is testing resistance near 1.4000.
- A breakout here could target 1.4060 – 1.4080.
- Precious metals’ pullback is driving CAD weakness.
🇯🇵 USD/JPY Forecast: Bulls Eye 152.00 on Yield Surge
USD/JPY rallied toward 148.00 on the back of rising Treasury yields. The 2-year yield neared 4.00%, and the 10-year approached 4.45%, supporting further upside in the pair.
- Next Resistance Zone: 151.50 – 152.00
- A successful breakout above 148.00 could ignite a fresh rally.
📉 Conclusion: USD Strength Driven by Trade Relief and Yield Optimism
The forex market is currently driven by optimism around U.S.–China trade negotiations and rising bond yields, providing strong tailwinds for the U.S. dollar. However, traders should watch for potential volatility ahead of key inflation data releases, which could influence the Fed’s rate stance and broader market sentiment.
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