• DXY was seen trading near the 99.50 area, weakening despite solid US Retail Sales.
  • Trump’s probe into mineral tariffs and China’s export curbs weighed on sentiment.
  • Key resistance remains around the 101.15–101.85 region; support sits near 98.93.

The US Dollar Index (DXY) is under pressure on Wednesday, seen around the 99.50 zone as risk aversion keeps investors tilted toward safe-haven assets like Gold. This comes despite the release of better-than-expected US Retail Sales, which rose 1.4% month-over-month in March to $734.9 billion, above the forecasted 1.3%. Annual growth stood at 4.6%, pointing to resilient consumer activity. Still, market focus remained squarely on trade tensions, after US President Trump launched a new probe into tariffs on critical mineral imports—seen as retaliation to China’s escalating non-tariff measures and export controls.

The trade spat intensified as the US maintained its 145% levies on Chinese imports while Beijing kept its 125% reciprocal tariffs. Meanwhile, Gold prices surged to a record high near $3,333 per troy ounce, fueled by fears that rising input costs from restricted mineral flows could choke key sectors like defense and tech. Global stocks dipped as investors weighed the risk of prolonged economic decoupling between the US and China.

Daily digest market movers: Gold price surges while US Dollar slumps

  • Retail Sales in the US rose 1.4% in March, beating expectations and showing 4.6% YoY growth.
  • President Trump ordered a probe into potential tariffs on all imports of critical minerals, raising supply concerns.
  • China imposed licensing requirements on key rare earth exports, deepening the trade rift with the US.
  • Despite slight diplomatic signals, China reiterated that talks would require mutual respect and cessation of threats.
  • The Gold price reached a record above $3,330 per ounce, benefiting from weak USD and lower US yields.
  • The US Dollar remained pressured as uncertainty over trade and inflation expectations kept demand for USD assets subdued.
  • Global equities softened after the US announced Nvidia chip export restrictions and possible mineral tariffs.
  • China’s Q1 GDP surprised to the upside at 5.4% YoY, along with better-than-expected industrial production and retail sales.
  • The DXY’s technical backdrop remains weak, with momentum tilted to the downside despite solid economic data.

Technical analysis: DXY pressured below key averages


The US Dollar Index paints a bearish outlook as it drifts near the 99.50 zone on Wednesday. The Relative Strength Index (RSI) stands at 26.96, firmly within oversold territory, while the Moving Average Convergence Divergence (MACD) maintains a sell signal with fresh red histogram bars. The Commodity Channel Index (CCI) at -147.57 suggests a potential buy signal, though broader momentum remains negative.

All major moving averages reinforce the bearish trend. The 20-day Simple Moving Average (SMA) sits at 102.77, while the 100-day and 200-day SMAs at 106.19 and 104.69 respectively, also slope downward. The 10-day Exponential Moving Average (EMA) and SMA at 101.15 and 101.40 add to the resistance overhead. On the downside, the next meaningful support lies around 98.93, while resistance levels stand at 101.15, 101.40, and 101.85.

The overall technical structure suggests that unless the DXY rebounds above the 101.00 area with strong conviction, the risk remains tilted to the downside amid softening yield differentials and macroeconomic uncertainty.


Tariffs FAQs

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.


Source: Fxstreet