USD: Holding pattern on the chart - ING

The Dollar Index (DXY) has found some support under 104.00 helped by a little more stability in US asset markets, ING's FX analysts Chris Turner notes.

DXY can trade a tight 104.00-104.50 trading range

"The S&P 500 has retraced about 40% of this year's losses, helped in part by the view that Washington's next round of tariffs due on 2 April could be a little more lenient or selective. Of course, this is a moving target, but no doubt the Administration will be taking keen note of the dip in US consumer confidence and what it could mean for broader growth trends should the US consumer finally decide to save a little more."

"Next week's tariff announcement also needs to be seen in the context of any 'Mar-a-Lago'-type plan for restructuring the global trading system. The key understanding in this plan is that the dollar would initially rally on the back of tariffs to provide protection to the US consumer. This may still be the case if the tariffs are aggressive enough against the EU and China - two of the largest trading blocs running large surpluses with the US."

"In the interim, however, expect the dollar to trade in relatively tight ranges while also finding a little support from Fed-speak, pointing to no rush for the next rate cut. We'd also say that if the US got into any stagflation-like scenario, it would be bullish for the dollar against activity currencies. DXY should trade a tight 104.00-104.50 trading range, with upside risk should a weaker sterling take European currencies lower today."