Repeated tariff policies coupled with dovish signals from the IMF dragged down the dollar's performance.
2026-02-26 11:27:20
On Thursday during Asian trading hours, the US Dollar Index (DXY), which measures the dollar's performance against six major currencies, continued its decline, hovering around 97.50. The core reason for the dollar's downward pressure lies in the ongoing policy uncertainty.
In his State of the Union address, US President Trump defended his tariff policy and criticized the Supreme Court for previously rejecting some tariff measures. Subsequently, the US government raised the newly introduced tariffs to 10%, lower than the previous 15%, but the policy reversal still kept markets cautious about the economic outlook.
In addition, IMF Managing Director Kristalina Georgieva made dovish remarks, pointing out that U.S. commodity inflation is partly due to the impact of tariffs, and suggesting that if the federal funds rate falls back to the 3.25%-3.50% range, it will be more in line with the goal of full employment.
This statement was interpreted by the market as a hint at future policy easing, thus weakening the dollar's appeal. However, she also emphasized that for US public debt to enter a sustainable downward trajectory, robust fiscal consolidation measures are needed.
Nevertheless, the dollar's decline has been somewhat limited. Recent comments from Federal Reserve officials have generally leaned hawkish. Chicago Fed President Austan Goolsby pointed out that the decline in inflation stalled last year, and the 3% inflation level remains significantly above the 2% policy target.
Boston Fed President Susan Collins also stated that maintaining the current interest rate for some time is appropriate given the resilient labor market and persistent inflationary pressures. This has cooled market expectations for a near-term rate cut.
From a daily chart perspective, the US dollar index has entered a period of correction after falling from its highs. The price is currently trading below the 20-day moving average, indicating a weak short-term trend. The RSI indicator has fallen to around 45, showing weakening momentum but not yet entering oversold territory, meaning there is still room for further downside but no conditions for acceleration.
97.30 forms the first short-term support level; a break below this level could lead to a test of the 96.80 area. Resistance lies in the 98.20 and 98.80 area; only a sustained move above 98 would allow the dollar to resume its rebound. Overall, the structure exhibits a slightly bearish bias within a range, but the downward momentum is relatively mild.
Editor's Note:
The US dollar index is currently under pressure from both policy uncertainty and dovish rhetoric, but continued emphasis on inflation risks by Federal Reserve officials has dampened market bets on short-term rate cuts. The fundamentals present a hedging situation of "negative policy disturbances and hawkish interest rate expectations," resulting in a weak dollar but lacking momentum for a trend-breaking move.
If inflation data weakens again in the short term, the US dollar may fall further below 97; if economic data remains resilient, the decline may stabilize in the 96.80-97.30 range. The overall assessment is a slightly bearish, volatile trend.
In his State of the Union address, US President Trump defended his tariff policy and criticized the Supreme Court for previously rejecting some tariff measures. Subsequently, the US government raised the newly introduced tariffs to 10%, lower than the previous 15%, but the policy reversal still kept markets cautious about the economic outlook.
In addition, IMF Managing Director Kristalina Georgieva made dovish remarks, pointing out that U.S. commodity inflation is partly due to the impact of tariffs, and suggesting that if the federal funds rate falls back to the 3.25%-3.50% range, it will be more in line with the goal of full employment.
This statement was interpreted by the market as a hint at future policy easing, thus weakening the dollar's appeal. However, she also emphasized that for US public debt to enter a sustainable downward trajectory, robust fiscal consolidation measures are needed.
Nevertheless, the dollar's decline has been somewhat limited. Recent comments from Federal Reserve officials have generally leaned hawkish. Chicago Fed President Austan Goolsby pointed out that the decline in inflation stalled last year, and the 3% inflation level remains significantly above the 2% policy target.
Boston Fed President Susan Collins also stated that maintaining the current interest rate for some time is appropriate given the resilient labor market and persistent inflationary pressures. This has cooled market expectations for a near-term rate cut.
From a daily chart perspective, the US dollar index has entered a period of correction after falling from its highs. The price is currently trading below the 20-day moving average, indicating a weak short-term trend. The RSI indicator has fallen to around 45, showing weakening momentum but not yet entering oversold territory, meaning there is still room for further downside but no conditions for acceleration.
97.30 forms the first short-term support level; a break below this level could lead to a test of the 96.80 area. Resistance lies in the 98.20 and 98.80 area; only a sustained move above 98 would allow the dollar to resume its rebound. Overall, the structure exhibits a slightly bearish bias within a range, but the downward momentum is relatively mild.
Editor's Note:
The US dollar index is currently under pressure from both policy uncertainty and dovish rhetoric, but continued emphasis on inflation risks by Federal Reserve officials has dampened market bets on short-term rate cuts. The fundamentals present a hedging situation of "negative policy disturbances and hawkish interest rate expectations," resulting in a weak dollar but lacking momentum for a trend-breaking move.
If inflation data weakens again in the short term, the US dollar may fall further below 97; if economic data remains resilient, the decline may stabilize in the 96.80-97.30 range. The overall assessment is a slightly bearish, volatile trend.
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