US Dollar climbs as trade rumors fuel market speculation

• The US Dollar Index (DXY) rises near the 99.65 area as traders react to conflicting US-China trade signals.
• Hopes of tariff relief and Fed rate cuts lift sentiment despite China denying any current negotiations.
• Resistance is seen at 99.92 and 100.95 for the DXY with technical indicators painting a mixed-to-bearish picture.
  
  

The US Dollar (USD) strengthens modestly on Friday as investors digest contradictory messaging from the United States and China regarding potential tariff negotiations. While President Donald Trump suggested dialogue is ongoing, Beijing explicitly denied any current talks. This divergence injected volatility into markets, though the Greenback maintained an edge, with the US Dollar Index (DXY) up around 0.37% near the 99.65 zone at the time of writing.

Despite entering a data-light session ahead of the May 7 Federal Open Market Committee (FOMC) meeting, market participants remain focused on potential catalysts. Reports surfaced that China may suspend some tariffs on US goods such as medical equipment, though Chinese officials dismissed any formal engagement on tariff discussions. Simultaneously, Cleveland Fed President Beth Hammack opened the door to a potential rate cut in June, depending on upcoming data.

Daily digest market movers: To talk or not to talk?

• President Trump reiterated that the US is in communication with China on trade, while China denied any active tariff negotiations.
• Bloomberg reported China may lift tariffs on select US goods, but Chinese officials deflected questions on exemptions.
• The Fed is in blackout mode ahead of its next meeting; traders eye final April University of Michigan sentiment and inflation expectations.
• Markets remain torn between optimism for a summer Fed rate cut and the absence of concrete progress on trade talks.
• Meanwhile, a notable rebound in US tariff revenue has supported the Treasury's fiscal position but remains insufficient to offset the broader costs associated with extending the Tax Cuts and Jobs Act (TJCA). 

Technical analysis: DXY eyes resistance near 99.92 amid fading momentum

The US Dollar Index trades on firmer footing near 99.65, but the technical outlook remains fragile. Both the Relative Strength Index (RSI) at 37.10 and the Moving Average Convergence Divergence (MACD) suggest that upside momentum is waning. While the MACD continues to flash a sell signal, the Average Directional Index (ADX) at 54.53 indicates a strong but potentially tiring trend.

Short and long-term moving averages reinforce a bearish stance. The 10-day Exponential Moving Average (EMA) at 99.93 and 30-day EMA at 101.80 both sit above current price levels. The 20-day, 100-day and 200-day Simple Moving Averages (SMA) are at 101.30, 105.78 and 104.53, respectively, also point lower.

Immediate support is marked at 99.55 and 99.49. On the upside, resistance looms at 99.93, with additional hurdles at 100.95 and 101.30. Unless headlines provide clearer direction -- particularly on tariffs or central bank action -- the DXY may remain range-bound near current levels.