US Dollar slides as markets brace for China trade talks

• US Dollar Index slips below 100.40 after rejection near one-month highs.
• US-China talks in Switzerland loom large over weekend headlines.
• Fed officials stress stable inflation expectations amid economic uncertainty.
  

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, reverses sharply on Friday after hitting a near one-month high of 100.86 earlier in the day. Disappointment surrounding the so-called US-UK trade deal weighed heavily on the Greenback, with investors focusing on this weekend's critical trade negotiations between the United States and China in Switzerland.

Daily digest market movers: US Dollar softens ahead of key talks

• The US-UK trade deal is being written off by markets as non-substantive, with US tariffs on UK goods remaining at 10%.
• Market focus shifts to US-China trade talks this weekend, where discussions are expected to be tense and inconclusive.
• President Trump hinted that tariffs on Chinese goods could fall to 50% if cooperation improves, though skepticism prevails.
• Chinese refineries imported 11.7 million barrels per day in April, with stockpiling driven by lower crude oil prices.
• US places Chinese independent refineries on the sanctions list for purchasing Iranian oil, adding pressure before trade talks.
• Federal Reserve Bank of New York President John Williams emphasized the importance of maintaining stable long-term inflation expectations.
• Fed Governor Adriana Kugler highlighted the current policy rate as moderately restrictive, suggesting it will remain unchanged.
• Commerzbank analysts warn that high Chinese crude imports are unlikely to sustain as US sanctions tighten further.
• Fed policymakers stressed that the economy remains healthy but warned of possible downside risks from elevated tariffs.
• Despite a short-term rise, the US Dollar Index faces selling pressure as stagflation risks emerge from persistent tariffs.
• The market now awaits concrete outcomes from the Fed's next policy moves and potential inflation developments.
• The US sanctions against Chinese refineries are expected to weigh on China's energy sector, potentially impacting trade talks.
• Iranian Oil imports from China remain high at 1.5 million barrels per day but could decline following US sanctions.
• Investors remain cautious, keeping a close eye on headline risks and weekend developments from the China-US meetings.
  
  

US Dollar Index technical analysis: DXY tests support

The US Dollar Index (DXY) trades around the 100.00 level, down over 0.30% on the day, after earlier testing highs near 100.86. Both the Relative Strength Index (RSI) at 46 and the Ultimate Oscillator at 59 show neutral momentum, while the Moving Average Convergence Divergence (MACD) flashes a buy signal. The Average Directional Index at 44 remains neutral, indicating no strong trend bias. 

Short-term buyers are supported by the 20-day Simple Moving Average (SMA) at 99.64, but longer-term resistance remains firm with the 100-day SMA at 105.11 and the 200-day SMA at 104.31 signaling continued selling pressure. Immediate support is located at 100.28, 100.24 and 99.97, while resistance is seen at 100.73, 100.80 and 100.86.