The dollar has begun to recover due to trade negotiations, and it will take some time to return to the throne of risk-averse

Asian Market Review

Last Friday, the US dollar index weakened as the market waited and watched the Sino-US talks, and once reached 100.08. As of now, the US dollar price is 100.59.

Related information on US trade policy:

China Press Conference: Substantive progress has been made at the high-level China-US economic and trade talks and an important consensus has been reached. The two sides agreed to establish a China-US economic and trade consultation mechanism. China and the United States will finalize the relevant details as soon as possible and will issue a joint statement reached at the talks on May 12.

Trump's blockbuster trailer: One of the most important and influential content will be released; Trump said he would sign an executive order and drug prices will be immediately reduced by 30%-80%.

U.S. avaforexcn.commerce Secretary: 10% benchmark tariffs will continue to exist for the foreseeable future.

India requires the United States to exempt all current and future tariffs. India proposes to reduce the tariff gap with the United States from nearly 13% to less than 4% under a potential trade agreement; von der Leyen: If there is a specific trade agreement, he may visit the United States; German Chancellor Merz: The United States should give the EU "zero tariffs"; Vietnam accuses Trump of unreasonable tariffs; the White House of the United States announced the terms of the US-UK "Economic Prosperity Agreement" and will seek preferential treatment to the UK on any drug tariff issues; Switzerland said it had held "constructive" trade negotiations with US officials and hoped to sign an agreement with the Trump administration; according to Japan's Asahi Shimbun:Japanese Prime Minister Shigeru Ishiba aims to promote negotiations on tariff agreements in July.

Putin proposed that Russia and Ukraine unconditionally restart direct negotiations in Istanbul, Turkey on the 15th, Zelensky said he would wait for Putin in Türkiye, and Trump said he questioned whether Ukraine would reach an agreement with Putin.

Federal Official News:

Bal: If inflation and unemployment rise at the same time, the Fed may face a difficult situation; Kugler: The labor market may be close to full employment; Barkin: Not all avaforexcn.companies can raise prices due to tariffs; Waller: The Fed's independent structure has proven its value; Bostic: Adjusting policies is not wise in the case of increased uncertainty; Hamak: The reason for maintaining monetary policy stability is sufficient; Mousalem: Rate cuts should not be promised until the impact of tariffs on inflation becomes obvious; Cook: Tariff policies may reduce productivity, limit potential output, and increase inflationary pressure; Federal Reserve Officials: Conventional morning operations of the Permanent Repurchase Tool (SRF) are avaforexcn.coming soon.

Summary of institutional views

Mitsubishi UF: Powell reiterated that the US dollar received short-term support but the hidden worries have not been eliminated

The US interest rate market is currently only priced at the Federal Reserve cut interest rates by about 4 basis points in June, and is no longer fully priced at the price (about 18 basis points) in July. At a press conference after the interest rate resolution this week, Fed Chairman Powell reiterated that the Fed believes there is no need to rush to cut interest rates. The Fed has been criticized by President Trump for being too slow to cut interest rates, but there is no sign that they succumb to political pressure. At present, the Federal Reserve is on the stand-by and see.

We expect the Fed to resume rate cuts when there is evidence that the U.S. labor market is loose due to trade disruptions and increased policy uncertainty, supporting our outlook for further weakness in the U.S. dollar in the second half of this year. However, the threshold for rate cuts at the June meeting is now higher, before the U.S. will release another non-farm jobs report, and President Trump's plan for higher peer tariff rates remains unlikely to become clear when the 90-day tariff delay ends on July 9.

The Fed's delay in rate cuts may help provide some much-needed support for the dollar in the short term, although the recent link between the dollar and short-term yield spread has broken. A gap has emerged between the short-term rate of return spread and the US dollar. This may indicate that market participants have included higher policy risk premiums in USD and/or position adjustments greater than weekdays have occurred.

Dutch International Bank: The "pragmatic version" Trump is far from each other, and Europe and the United States are still overvalued in the short term

Most of the past two weeks, European and American bulls have performed strongly in the 1.1250-1.1300 region. Yesterday, the market broke the market and sent an important signal - as Trump strengthened his expectations of reaching a trade agreement and showed a more attention to market trends, the market's optimism about the US dollar has initially heated up.

Although this is far from the "pragmatic version" Trump, which is based on the market pricing of the Inaugural Day, it is enough to curb growth and debt-based issuesThe accumulation of short positions in the US dollar in question. At present, the market is doubtful about its readiness to rebuild its strategic position in the US dollar, and it may take time to restore its position as a safe-haven asset. At the same time, we estimate that Europe and the United States will still be overestimated by 2% in the short term, and more signs indicate that Trump's shift to a market pleasing model may force the risk premium to further avaforexcn.compress.

The euro zone financial calendar is light today. Focus on whether Europe and the United States can build a new support platform at 1.1200. If the downward breaks, it will indicate a significant shift in the sentiment of the currency pair and open up space for deeper adjustments. The next important support is 1.1000.

Analyst BobMason

Economists expect the April Economic Observer Outlook Index to rise slightly from 45.2 in March to 45.5 in April (released at 1 p.m.). If this area of ​​confidence improves, it may mean an increase in employment and a rebound in wage growth; rising wages are expected to drive consumer consumption and boost demand-driven inflation, which in turn prompts the Bank of Japan to adopt a more radical tightening stance. On the contrary, if the index is lower than expected, it may weaken market expectations for the Bank of Japan's interest rate hike in the third quarter of 2025.

The market may be more sensitive to the outlook index than the index that reflects the current situation, because the current situation index may be biased due to the continued U.S.-Japan trade frictions. Trade progress will also affect the demand for the Japanese yen: If news of a trade agreement between China and the United States is implemented, the market demand for safe-haven assets such as the Japanese yen may be reduced.

In terms of specific scenarios, if the details of the Sino-US trade agreement are released delayed, the service industry data performs strongly, or the Bank of Japan sends hawkish signals, the United States and Japan may fall 142.5; if China and the United States reach a zero-tax trade agreement, the service industry data is weak, or the Bank of Japan's position turns pigeon, the United States and Japan may break through the 50-day moving average and approach the April 10 high of 147.714.

Analyst David Scutt

Affected by positive signals released by Sino-US trade negotiations over the weekend, safe-haven assets such as gold and Swiss franc weakened in the early trading session on Monday. Although the negotiations did not disclose specific details, the optimistic statements of the delegations on the progress not only benefited their respective economies, but also boosted global market confidence, which means that the recent pullback trend of safe-haven assets may continue further in the short term. The dollar against the Swiss franc rose to more than a month high after restarting during the Asian trading session, further breaking the 23.6% Fibonacci retracement level (0.83138) of the February-April decline. There is strong resistance in the range of 0.8375-0.8400 above, and this area coincides with the position where the currency pair received buying support in the second half of 2024. The sharp rebound of the exchange rate here on April 9 also confirms the importance of this area.

If the US dollar against the Swiss franc can stand firm above 0.8400, it may advance towards the 38.2% Fibonacci retracement level (0.84831). Going further up,The 50-day moving average and the 0.8617 level will constitute a more severe technical resistance. The key support levels below 0.83138 include 0.8272 and 0.8200, and you need to pay attention to the upward trend line formed on April 21 (located between these two support levels). The current price momentum has changed from bearish to neutral, and the market's attention to price trend signals has increased significantly. If the recent trend continues, market operations may be more inclined to buy on dips rather than sell on highs.

The above content is all about "[Ava Ava Foreign Exchange]: The US dollar has begun to recover due to trade negotiations, and it will take some time to return to the throne of risk aversion". It was carefully avaforexcn.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your transactions! Thanks for the support!

Spring, summer, autumn and winter, every season is a beautiful scenery, and it stays in my heart forever. Leave~~~