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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Market Analysis]: The US dollar index raids the 104 mark! Can the bull army conquer this time?" Hope it will be helpful to you! The original content is as follows:
Aihua Foreign Exchange APP News - On Thursday (March 13), the US dollar index suddenly hit the 104 mark after three consecutive days of sideways, reaching a maximum of 104.08 intraday. This fluctuation coincides with the unexpected weakening of the US PPI data in February, which forms a contradictory avatradescn.combination of the number of weekly unemployment claims to improve beyond expectations. At the same time, the Trump administration announced that it plans to impose 200% tariffs on EU wines. The market showed a unique "anti-logic" trend under the interweaving of multiple variables. Although weak inflation data may strengthen the expectation of interest rate cuts, US Treasury yields rose against the trend to a five-day high of 4.34%, pushing the February PPI data released on the same day to be lower than expected in all aspects: zero monthly growth (expected 0.3%), and the core monthly rate even contracted by 0.1%; the annual rate of 3.2% continued to fall from the previous value of 3.5%. This echoes the weakness of CPI data the day before yesterday, and in theory, the market should strengthen the pricing of the Federal Reserve's accelerated interest rate cuts. But at the same time, the number of initial unemployment benefits that week fell to 220,000 (expected 225,000), and the number of renewals also fell to 1.87 million, and the resilience of the job market continued to exceed expectations. "This data avatradescn.combination will rebound from a low of 4.10% on March 4 to 4.34%, the largest three-day gain in five months, despite inflation data pointing to a loose outlook. The head of fixed income trading at a top Wall Street investment bank explained: "This seems contradictory, but it actually reflects that funds are moving from bond markets to stock markets on a large scale - the S&P 500 rose 2.3% in the same period, confirming the rebound in risk appetite. The bond market selling pressure caused a passive rise in yields, thus providing support to the US dollar. "III. Geopolitical variables: potential impact of tariff shocks Trump administration plans to target EU wineThe threat of imposing 200% tariffs has injected new uncertainty into the market. A foreign exchange strategy team of a European multinational bank analyzed: "Although the policy has limited direct impact (EU's exports to the United States in 2024 are about US$3.7 billion), the chain reaction it may trigger is worthy of vigilance. If it evolves into a transatlantic trade confrontation, the daily level of the US dollar index will form a bullish pherophy pattern, but the 200-day moving average (105.02) and the year's high of 105.89 form a strong resistance band. If the weekly line can stand above 104.50, it may start a sprint towards the 105.50 area." But the agency also warns that the momentum indicator shows signs of top divergence. If the U.S. Treasury yield falls unexpectedly, it may trigger a rapid correction to the 103.00 area. 5. Panoramic scan of institutional viewpoints 1. JPMorgan Macro Strategy Team: "The current strength of the US dollar is the logic of "choose the best of the worst" - although US inflation has cooled down, its growth prospects are more certain than other major economies. We maintain the volatility range judgment of the US dollar index of 103-105.5 in the second quarter."2. Goldman Sachs Foreign Exchange Analysis Department: "The weakening of PPI data may delay the time point of the Fed's policy shift, because corporate profit space avatradescn.compresses or curbs investment activities. It is recommended to focus on retail sales data in March to verify the resilience of the demand side."3. UBS Wealth Management Chief Economist: "The steepening of the US bond yield curve reflects the market's price increase for the 'no landing' scenario. In this environment, the US dollar will remain relatively strong until
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