As trade tensions between the US and Europe ease, the US dollar index rebounds slightly.
2026-01-22 13:53:39
On Thursday during Asian trading hours, the US dollar index (DXY) remained high after recording a modest gain in the previous session, trading around 98.80.
Market sentiment is generally cautious as investors await the release of a series of important U.S. macroeconomic data, including weekly initial jobless claims, annualized GDP growth, and the personal consumption expenditures (PCE) price index, to assess the latest developments in U.S. economic momentum and inflation trends.
The US dollar has recently found support, primarily due to a temporary easing of geopolitical tensions. US President Trump's statement that he would temporarily suspend tariffs on European countries opposing his position on Greenland reduced market concerns about escalating trade friction between the US and Europe.
Previously, Trump had repeatedly sent strong signals, including not ruling out a new round of tariffs on some EU countries, which exacerbated market risk aversion. As the policy tone softened and risk appetite improved, the US dollar received some support.
Trump also mentioned that the United States and NATO have reached a "framework for a future agreement" on the Greenland issue. Although the specific details are still unclear, the market interprets this as a sign that the negotiation channels still exist, thereby reducing the probability of an escalation of the conflict in the short term.
This uncertain but moderate stance has kept the US dollar relatively strong among major currencies. Regarding monetary policy, recent signals from Federal Reserve officials remain cautious.
Although the market still expects room for a cumulative rate cut of about 50 basis points later this year, there is a general consensus within the Federal Reserve that it is in no hurry to start an easing cycle until there is clearer evidence that inflation is falling steadily back to the 2% target.
This "wait-and-see but not hasty" stance has provided some support for the US dollar.
From a technical perspective, the US dollar index found support around 98.50 and rebounded, currently in a short-term consolidation phase. The daily chart shows the index is still trading within its recent upward channel, with momentum indicators in a neutral-to-strong range, indicating that the bulls still hold some initiative.
The key resistance level to watch is the 99.20–99.50 range; a successful break above this level could open up further upside potential. On the downside, support lies at 98.30; a breach of this level could lead to a retest of previous lows. Overall, the US dollar index is likely to remain range-bound in the short term, with its directional direction depending on data releases.
Editor's Note:
The US dollar index is currently at the intersection of a "news vacuum" and a "pre-data wait-and-see period." Trump's easing of tariffs on Europe has temporarily reduced market risk aversion, but has not completely eliminated uncertainty; meanwhile, the Federal Reserve's patience on interest rate cuts has limited the dollar's downside potential.
The US dollar index is more likely to remain range-bound ahead of the release of key economic data. What will truly determine its next direction will be whether inflation and employment data provide clearer signals regarding the Federal Reserve's policy path.
Market sentiment is generally cautious as investors await the release of a series of important U.S. macroeconomic data, including weekly initial jobless claims, annualized GDP growth, and the personal consumption expenditures (PCE) price index, to assess the latest developments in U.S. economic momentum and inflation trends.
The US dollar has recently found support, primarily due to a temporary easing of geopolitical tensions. US President Trump's statement that he would temporarily suspend tariffs on European countries opposing his position on Greenland reduced market concerns about escalating trade friction between the US and Europe.
Previously, Trump had repeatedly sent strong signals, including not ruling out a new round of tariffs on some EU countries, which exacerbated market risk aversion. As the policy tone softened and risk appetite improved, the US dollar received some support.
Trump also mentioned that the United States and NATO have reached a "framework for a future agreement" on the Greenland issue. Although the specific details are still unclear, the market interprets this as a sign that the negotiation channels still exist, thereby reducing the probability of an escalation of the conflict in the short term.
This uncertain but moderate stance has kept the US dollar relatively strong among major currencies. Regarding monetary policy, recent signals from Federal Reserve officials remain cautious.
Although the market still expects room for a cumulative rate cut of about 50 basis points later this year, there is a general consensus within the Federal Reserve that it is in no hurry to start an easing cycle until there is clearer evidence that inflation is falling steadily back to the 2% target.
This "wait-and-see but not hasty" stance has provided some support for the US dollar.
From a technical perspective, the US dollar index found support around 98.50 and rebounded, currently in a short-term consolidation phase. The daily chart shows the index is still trading within its recent upward channel, with momentum indicators in a neutral-to-strong range, indicating that the bulls still hold some initiative.
The key resistance level to watch is the 99.20–99.50 range; a successful break above this level could open up further upside potential. On the downside, support lies at 98.30; a breach of this level could lead to a retest of previous lows. Overall, the US dollar index is likely to remain range-bound in the short term, with its directional direction depending on data releases.
Editor's Note:
The US dollar index is currently at the intersection of a "news vacuum" and a "pre-data wait-and-see period." Trump's easing of tariffs on Europe has temporarily reduced market risk aversion, but has not completely eliminated uncertainty; meanwhile, the Federal Reserve's patience on interest rate cuts has limited the dollar's downside potential.
The US dollar index is more likely to remain range-bound ahead of the release of key economic data. What will truly determine its next direction will be whether inflation and employment data provide clearer signals regarding the Federal Reserve's policy path.
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