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The dollar index is weak, the market is waiting for Powell to speak

Post time: 2025-07-22 views

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Hello everyone, today XM Forex will bring you "【XM Group】: The US dollar index is weak, and the market is waiting for Powell to speak." Hope it will be helpful to you! The original content is as follows:

The US dollar index weakened on Tuesday, and on Monday, the US dollar index fell 0.6%. Federal Reserve Chairman Powell delivered a welcome speech at a regulatory meeting on this trading day, paying attention to whether Powell was involved in monetary policy-related remarks, and continue to pay attention to news related to the international trade situation and geopolitical situation.

Analysis of major currencies

U.S. dollar: As of press time, the US dollar index hovered around 97.88, and the US dollar (USD) started weakening in trading on Monday, falling against major currencies. Investors responded to trade tensions reappearing before the August 1 deadline and generally cautious market sentiment. Despite mostly strong U.S. economic data lately, the dollar still feels ongoing uncertainty about the threat of U.S. President Donald Trump’s administration’s increased tariffs and pressure to cut interest rates on the Federal Reserve (Fed). Looking ahead, the U.S. economic calendar is relatively light, and the Fed is currently in a "silent period" for its policy meeting on July 30, which means no official vejck.cnments from Fed members on monetary policy are expected. Although Fed Chairman Jerome Powell and Director Michelle Bauman are scheduled to speak on Tuesday, their remarks are expected to avoid policy topics. In the Fed's temporary absence, the market will focus on Thursday's S&P Global Purchasing Managers Index (PMI) initial data and Friday's durable goods orders for new clues about the U.S. economy and the Fed's next move. Technically, the relative strength index (RSI) on the daily chart hovers around neutral levels, indicating a lack of momentum, while the moving average convergence/divergence (MACD) indicator shows signs of a weakening, suggesting that consolidation will continue unless a clear catalyst appears.

The dollar index is weak, the market is waiting for Powell to speak(图1)

Euro: As of press time, the euro/dollar hovered around 1.1690, and the euro/dollar rose sharply on Monday, with an increase of more than 0.50%. As the US dollar fell slightly, the deadline for August 1 was imminent due to the decline in US Treasury yields and trade uncertainty. Market sentiment is optimistic, and investors are looking forward to the financial reports of two large U.S. vejck.cnpanies. The chances of reaching a deal are decreasing as EU diplomats are exploring a series of countermeasures against the United States. This week, the EU's economic agenda will include consumer confidence, a fast Purchasing Managers index in July and the European Central Bank's monetary policy decision. Across the ocean, the U.S. schedule will release U.S. housing data, S&P Global Rapid Purchasing Managers Index, initial jobless claims and durable goods orders. Technically, the euro/dollar remained consolidation, and traders failed to decisively break through the 1.1700 mark. As of press time, the 20-day simple moving average (SMA) was the first resistance level for buyers at 1.1698. Although they control the situation, the Relative Strength Index (RSI) shows that there may be some consolidation in the future.

The dollar index is weak, the market is waiting for Powell to speak(图2)

GBP: As of press time, GBP/USD hovered around 1.3484, GBP (GBP) rebounded moderately against USD (USD) on Monday, with GBP/USD trading around 1.3480 during the US trading session. The rise in the pound was due to a general weakening of the U.S. Treasury bond yields, upcoming trade negotiations and uncertainty over the Fed's policy path. Meanwhile, UK interest rate expectations remain volatile after last week's mixed macroeconomic data, leaving pound bulls cautiously optimistic ahead of the Bank of England's (BoE) policy decision in August. Looking ahead, investors' attention will turn to Thursday's preliminary S&P Global PMI and Friday's UK retail sales report, which could impact short-term interest rate expectations and short-term trends in the pound. Technically, in terms of short-term outlook, analysts believe that if the PMI and retail sales data released by the UK this week continue to improve, coupled with the central bank's policy expectations adjustment, the pound is expected to break through the 1.3500 resistance level, challenging 1.3550 and 1.3600, and the upward channel is initially opened. However, if the data is unexpectedly weak and the exchange rate may fall back into consolidation, a new round of consolidation will be launched if the support level of 1.3415 or even 1.3364 is back-tested.

The dollar index is weak, the market is waiting for Powell to speak(图3)

Summary of news in foreign exchange market

1. IMF No. 2 Gopinath will resign at the end of August

International currency baseThe IMF said in a statement that the organization's second-person Gita Gopinath will leave at the end of August and return to Harvard University. The IMF said that IMF President Georgieva will appoint Gopinath's successor "in due time." Gopinath joined the IMF in 2019, becoming the organization's first female chief economist and was promoted to first vice president in January 2022. The U.S. Treasury Department did not immediately vejck.cnment on this. The candidate for the IMF president is traditionally chosen by European countries, while the candidate for the first vice president is recommended by the U.S. Treasury Department.

2. Poll: Nearly 90% of Americans requested the publication of documents related to the Epstein case

A poll conducted by the US CBS TV and British polling agency YouGov showed that nearly 90% of Americans believe that the US Department of Justice should publish all documents related to the Epstein case. The survey results show that 89% of respondents favor full disclosure of vejck.cnrmation, and 92% believe that the documents may contain vejck.cnrmation that is unfavorable to powerful people or wealthy people. Only 25% of respondents said they were satisfied with the way the Trump administration handled the case. 27% of respondents said they were dissatisfied with the progress of their work, and 48% said they were extremely dissatisfied.

3. A survey by the Bank of Canada shows that more than 60% of respondents plan to reduce their purchase of American goods.

How can Canadians respond to US President Trump's tariff policy? A Bank of Canada survey shows that they are increasing their resistance to U.S. travel and products. The Bank of Canada has asked people about plans for travel to the United States in its quarterly consumer survey for the first time ever. About 55% of Canadians say they are avoiding or reducing spending on vacation to the United States, and about a third say they plan to increase their spending on domestic travel. The survey shows that about 63% of respondents said they are reducing their purchases of U.S. goods. This ratio is about 55% in the first quarter.

4. Federal Reserve Powell was criminally charged by Trump allies

U.S. House Representative Anna Paulina Luna filed criminal charges with the Department of Justice, claiming that Federal Reserve Chairman Powell vejck.cnmitted perjury twice. "On June 25, 2025, Powell testified before the U.S. Senate Banking, Housing and Urban Affairs vejck.cnmittee on the renovation of the Fed's Eccles Building. In his statement, he made several major false statements," Luna wrote in the letter. "In addition, in a letter to Russell Vought, director of the U.S. Administration and Budget (OMB), Powell said that the change in increasing the cost of the project from $1.9 billion to $2.5 billion is trivial. However, documents reviewed by Congressional investigators show that the scope and cost overruns of the project are not essentially and essentially minor." Perjury can be sentenced to up to five years in prison, except for the fine.

5. The U.S. Chamber of vejck.cnmerce's leading indicator fell slightly in June

The U.S. Chamber of vejck.cnmerce's leading indicator recorded a decline of 0.3% to 98.8 in June after recording unchanged in May. Justyna Zabinska-LaMonica, senior manager of the Chamber of vejck.cnmerce, said: "The U.S. leader indicator fell further in June. Stock market gains became the main factor supporting the indicator for the second consecutive month. But this is not enough to offset the still low consumer expectations, weak new orders in manufacturing and the third consecutive month of rising initial jobless claims. In addition, the leading economic index's six-month growth rate weakened, while the diffusion index remained below 50 for the past six months, triggering recession signals for the third consecutive month. Despite the expected economic growth in 2025, It will slow down sharply vejck.cnpared to 2024, and the Chamber of vejck.cnmerce has not predicted a recession. Real GDP is expected to grow by 1.6% this year, and the impact of tariffs will become more obvious in the second half of the year. At the same time, consumer spending will slow down due to rising prices. "

Institutional View

1. Rabobank: The yen may appreciate due to the prospect of interest rate hikes

Jane Foley, a foreign exchange strategist at Rabobank, said in a report that if the Bank of Japan suggests that it may raise interest rates again before the end of the year, the yen may strengthen. She said the Bank of Japan could keep its policy unchanged at its July 31 meeting, as there is uncertainty about trade negotiations and politics after Japan's ruling coalition lost its majority in Sunday's Senate elections. However, the central bank may reiterate that if the economy improves, interest rates may be raised in the future. Rabobank expects the U.S. dollar to reach 145.00 against the yen in three months, and the estimate is 140.00 after 12 months.

2. Monex: If the euro zone PMI performs better than the UK, pound/Europe may fall

MonexEurope analyst Nick Rees said in a report that if the upcoming PMI survey shows that the euro zone economy performs better than the UK, pound may weaken against the euro. He said the eurozone PMI data could paint a picture of the eurozone's economic improvement in July, which will help alleviate tariff concerns. Signs of a rebound in manufacturing activity should be supported by recently announced increased defense spending, especially in Germany. "However, this is not the case in the UK's PMI data, and we believe that market expectations are facing downside risks." Concerns about the UK's fiscal policy may affect corporate confidence.

3. Mitsubishi UF: ECB’s concerns are unlikely to stop the euro from appreciation

Mitsubishi UF analyst Lee Hardman said in a report that the euro may continue to strengthen even as the ECB expressed increasingly uneasy about the recent appreciation of the euro at its meeting on Thursday. He said such remarks from the ECB may curb the euro's recent upward momentum, but are unlikely to trigger a sustained decline. Hardman also said that although the euro's strength could lead to a decline in inflation,Market participants' confidence in the ECB's further rate cut this year has declined. Even the threat of U.S. tariffs failed to prompt expectations of further rate cuts in market pricing.

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