The US Dollar (DXY) pauses at 98.00 as markets await clarity – What's next?

Forex

Summary:

The US Dollar Index (DXY) is consolidating around 98.00 amid low summer volumes and market indecision. Traders await clarity from geopolitical talks and inflation outlook. Key levels: resistance at 98.50–100.50, support at 97.94–97.15.

The morning NA session follows a quasi-dead European overnight trading.

This tends to happen when a lack of data adds to the Summer trading when volumes are typically subdued.

The Dollar Index had been in the middle of many headwinds, as per usual. After a stellar July followed by and N-shaped (for nope) downward spiral in the beginning of August, it has been difficult to spot where the Greenback is heading.

Forex volatility tends to calm during summers and lack of decisive trends exacerbate this rangebound trading – When the path is unclear, rangebound trading is typical (particularly in currencies.)

With Markets awaiting more developments after the White House gathered heads from Russia, Ukraine and the EU, the Dollar is forming a temporary bottom around the 98.00 Handle.

This region had already formed the post-Liberation day bottom (quickly broken in May).

The White House meetings went well and the US will now attempt to create a Putin-Zelenskyy meeting.

Donald Trump, the author of the Art of the Deal, is an unpredictable leader but one sure thing, he is a monster negotiator, and this is giving back some confidence in the US.

In our most recent DXY analysis, we mentioned an expectation of a more balanced Dollar as a lack of continuation upwards and a not-broken bottom show indecision.

Let's see if this indecision shall continue, at least to the technical side.

Dollar Index (DXY) Technical Analysis

Dollar Index Daily Chart

Dollar Index Daily Chart, August 19, 2025

The US Dollar is holding its low-sloped ascending channel in a 5 day consolidation around the 98.00 handle.

The post-CPI data had created a new offer for the US Dollar as Markets rushed to price the September cut to 97% before the surprising PPI data changed the course of action.

With the future US inflation expectations rising considerably, the fundamental background for the Dollar (like its rate outlook) is more uncertain.

The Daily RSI is way into the Neutral territory and the Daily doji is an indecision one. All of this is also happening right around the 50-Day MA (currently at 98.065).

Let's have a closer look to spot what breakout points could be in play when the action picks up again.

Dollar Index 2H Chart

Such indecisive price action doesn’t warrant analysis across many timeframes – it is better in this environment to look at where we see the most.

The US Dollar (DXY) pauses at 98.00 as markets await clarity – What's next?_2

Dollar Index 2H Chart, August 19, 2025

The Dollar Index is stuck between the 97.60 Support and the 98.50 Resistance Zones.

With the Price action rebounding from the lows of the Daily upward Channel supplemented by the 2H MA 50 acting as support, it seems that the preferred path would be to the upside.

If things were so sure however, the Dollar would have risen already to test the following resistance zone.

Typically, in this environment, it is good to look at the highs (98.30) and lows of the session (97.94) to see where if the action breaks out from there.

To the upside, look at the 2H MA 200 currently at 98.515.To the downside, look at the 97.60 Support Zone, then the 97.15 July upward pivot.

Levels to place on your DXY Charts:

Resistance Levels

98.50 Pivot Zone now resistance (confluence with 2H MA 200)

Resistance 99.20 to 99.40

Main 100.00 to 100.50 Resistance

Support Levels

2H MA 50 (97.94)

97.60 Support

July Pivot before run-higher 97.15

Source: marketpulse

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Glendon

Economic

Forex

The dollar fell on Wednesday after U.S. President Donald Trump called on Federal Reserve Governor Lisa Cook to resign, as investors also waited on a speech by Fed Chair Jerome Powell on Friday for clues on interest rate policy.

Trump cited a call by the head of the U.S. Federal Housing Finance Agency urging the Department of Justice to probe Cook over alleged mortgage fraud. Spokespeople for Cook and the Fed did not immediately respond to requests for comment.

“The market has voted with its pocketbook that it doesn't like when the president interferes with the Federal Reserve,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Trump has been critical of Powell for being to slow to cut rates, and traders expect he will replace the Fed Chair with a more dovish appointment when his term ends in May.

But Powell may stay on the board of governors, which would limit how many appointments Trump may make and could crimp plans to form a more dovish composition of policymakers.

“This is just a thinly veiled attempt to get control of the Federal Reserve, because if Powell doesn't step down as Governor when his chair ends, Trump's only appointment is the Kugler seat that he gave to Miran temporarily,” Chandler said.

Trump earlier this month said he would nominate Council of Economic Advisers Chairman Stephen Miran to serve out the final few months of a vacant Fed seat after Fed Governor Adriana Kugler unexpectedly resigned.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.16% on the day at 98.16, with the euroup 0.15% at $1.1664.

The Japanese yenstrengthened 0.21% against the greenback to 147.37 per dollar.

Traders are focused this week on whether Powell will push back against market expectations for a rate cut at the Fed’s September 16-17 meeting when he speaks at the U.S. central bank’s Jackson Hole meeting on Friday, following a weak jobs report for July.

Powell has said he is reluctant to cut rates on expectations that Trump’s tariff policies will increase inflation this summer.

Consumer price inflation data for July showed limited impact from tariffs but hotter than expected producer price inflation has tempered expectations for how many cuts are likely this year.

Fed funds futures traders are currently pricing in 85% odds of a cut next month, and 54 basis points of cuts by year-end.

Later on Wednesday, the Fed will issue the minutes of its July 29–30 meeting, when it held rates steady, although they may offer limited insight as the meeting came before the weak jobs numbers.

The New Zealand dollardropped 1.04% to $0.5831, a four month low, after the country’s central bank cut its policy rate by 25 basis points to a three-year low of 3.00% and flagged further reductions in coming months as policymakers warned of domestic and global headwinds to growth.

The Swedish crownstrengthened 0.1% to 9.59 after Sweden's central bank held its key interest rate at 2.00% as expected.

Sterling weakened 0.07% to $1.3481 after British inflation hit its highest in 18 months in July, but was not seen as swaying Bank of England policy.

"The BoE is more concerned about food inflation, which hasn't changed much in today's release," ING's head of research Chris Turner said.

In cryptocurrencies, bitcoinfell 0.22% to $113,324.

Source: Reuters

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Winkelmann

Commodity

Forex

Political

Economic

Key points:

● China buys 15 Russian oil cargoes for October-November delivery

● Indian demand for Russian oil declines as discounts narrow in July

● Trump threatens retaliatory tariffs against Russian oil buyers

Chinese refineries have purchased 15 cargoes of Russian oil for October and November delivery as Indian demand for Moscow's exports falls away, two analysts and one trader said on Tuesday.India has emerged as the leading buyer of Russian seaborne oil, which has sold at a discount since some Western nations shunned purchases and imposed restrictions on Russian exports over Moscow's 2022invasion of Ukraine.Indian state refiners paused Russian oil purchases last month, however, as those discounts narrowed. And U.S. PresidentDonald Trumpis also threatening to punish countries for buying Russian crude.

China had secured 15 Russian Urals cargoes for October–November delivery by the end of last week, said Richard Jones, a Singapore-based crude analyst at Energy Aspects.

Each Urals cargo ranges in size from 700,000 to 1 million barrels.

Kpler senior analyst Xu Muyu wrote in an August 14 report that China has likely purchased about 13 cargoes of Urals and Varandey crude for October delivery, along with at least two Urals cargoes for November.The additional Russian Urals supply could curb Chinese refiners' appetite for Middle Eastern crude, which is $2 to $3 per barrel more expensive, Xu said.This, in turn, could add further pressure to the Dubai market which is already losing momentum as seasonal demand fades while competition from arbitrage supply intensifies, she added.

A trade source agreed with Kpler's estimate, adding that the cargoes were booked mostly at the beginning of this month by Chinese state-owned and independent refineries.China, the world's top oil importer and largest Russian oil buyer, primarily buys ESPO crude exported from the Russian Far East port of Kozmino due to its proximity. Its year-to-date imports of Urals crude stood at 50,000 barrels per day, Kpler data showed.

Urals and Varandey crude are typically shipped to India, Kpler data showed.

Indian state-refiners have backed out Russian crude imports by approximately 600,000 to 700,000 bpd, according to Energy Aspects' Jones."We do not expect China to absorb all of the additional Russian volumes, as Urals is not a baseload grade for Chinese majors," he said, referring to Chinese state refineries which are not designed to solely process the Russian grade.Chinese refiners will also be wary about the possibility of U.S. secondary sanctions if Trump's push for a Ukraine peace deal breaks down, he added.

Trump said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks".

Source: TradingView

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Adam

Economic

U.S. stock futures slipped lower Wednesday ahead of the release of the minutes from the last Federal Reserve policy meeting. Target heads up a deluge of earnings from the important retail sector, while semiconductors will also be in the spotlight as the U.S. government weighs up taking stakes in the sector. Tesla CEO Elon Musk is also reportedly shelving his political ambitions.

Fed minutes could show divisions

Federal Reserve Chair Jerome Powell is set to speak at the Jackson Hole symposium at the end of the week, but investors may not have to wait until then for clues about the central bank’s next move as the minutes of the last meeting are due later in the session.

The Fed has maintained its policy rate in the 4.25%-4.50% range for all of this year, with some policymakers, and Powell in particular, expressing worries that the Trump administration’s tariffs could reignite inflation.

However, this stance has resulted in severe criticism from President Donald Trump, and some Fed officials have recently broken ranks, calling for lower interest rates.

These minutes could show how deep divisions run after Governors Christopher Waller and Michelle Bowman dissented at the last meeting, marking the first time two voting Fed officials have done so since 1993.

Investors and economists are betting the Fed will cut rates by a quarter of a percentage point next month with perhaps another reduction of similar size to come later in the year.

The annual Jackson Hole gathering kicks off with informal interviews ahead of the formal agenda release Thursday evening. Powell’s key address on Friday morning will focus on the economic outlook.

U.S. futures fall ahead of Fed minutes

U.S. stock futures slipped lower Wednesday, with investors cautiously awaiting the release of minutes from the last Federal Reserve policy meeting as well as earnings from a number of major retailers.

At 03:00 ET (07:00 GMT), the S&P 500 futures traded 12 points, or 0.2%, lower Nasdaq 100 futures dropped 75 points, or 0.3%, and Dow futures fell 85 points, or 0.2%.

The major indices closed in a mixed fashion Tuesday, with the S&P 500 falling 0.6% and the NASDAQ Composite dropping 1.5%, while the Dow Jones Industrial Average closed marginally higher.

Investors are likely to trade in a cautious manner Wednesday ahead of the key release of minutes from the last Fed policy meeting [see above] as they seek clues about future monetary policy ahead of the Federal Reserve’s Jackson Hole symposium later in the week.

There are also more quarterly earnings due from a number of major retailers, including Target [see below], Lowe’s and TJX before the bell.

U.S. companies have posted their strongest earnings beats in more than three years during the second quarter, according to an analysis by Jefferies, adding that the “difference between actual & consensus earnings growth is 12.3%, the widest spread since 1Q’22.”

U.S. government looking at semiconductor equity stakes

The U.S. government is weighing taking equity stakes in semiconductor firms receiving CHIPS Act subsidies to build factories in the country, according to a Reuters report.

Apart from Intel (NASDAQ:INTC), Commerce Secretary Howard Lutnick is also exploring deals with Micron Technology (NASDAQ:MU), Taiwan Semiconductor Manufacturing (NYSE:TSM) and Samsung (KS:005930) that would see Washington secure ownership interests in return for billions in grants, the report said.

The move would mark a historic shift in U.S. industrial policy, giving the government direct influence over companies key to national security. The White House has already confirmed talks with Intel on a potential 10% stake.

Washington last year allocated $6.6 billion to TSMC, $6.2 billion to Micron and $4.75 billion to Samsung, according to the report.

Target’s results in spotlight

Target (NYSE:TGT) heads the earnings flow Wednesday, as the focus remains on the retail sector this week, with reports due from a host of big-box retailers and home improvement chains.

The struggling retailer reports fiscal second-quarter earnings before the bell, with investors looking for signs that it is getting back on track given annual sales have been roughly stagnant for about four years.

Wall Street expects the big-box retailer to report earnings per share of $2.03 and revenue of $24.93 billion for the last quarter, according to a survey of analysts by LSEG.

“We see increasing longer-term sales and margin risks for Target given slowing digital sales growth, a lack of scale in digital advertising and third-party marketplace, elevated tariff, pricing and merchandising headwinds, and increasing competitive threats from Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN),” analysts at Bank of America said, in a note late last week.

Investors will also look for what the retailer says regarding tariffs, as Target’s imports account for roughly 50% of its cost of goods sold, versus Walmart’s 33%.

Home Depot (NYSE:HD) was the first of the major big-box retailers to report this week, with the U.S. home-improvement chain keeping its annual forecasts intact despite posting muted quarterly results on Tuesday.

Earnings are also due from Lowe’s Companies (NYSE:LOW) and TJX Companies (NYSE:TJX) before the open.

Musk shelving political ambitions - WSJ

Elon Musk is quietly shelving his plans to start a political party, according to a report in the Wall Street Journal, a move that will likely be welcomed by Tesla (NASDAQ:TSLA) shareholders.

The Tesla CEO had in July said he would start a new party, called the America Party, to represent voters unhappy with both the Republicans and the Democrats.

This followed a major falling out with U.S. President Donald Trump, largely over Musk’s criticism of Trump’s “big beautiful bill,” which he claimed would undermine his efforts to cut government spending as part of the Department of Government Efficiency.

However, Musk has since made few actual moves towards establishing the third party, and the WSJ reported Musk as telling allies that he wants to focus his attention more on his companies, and is reluctant to alienate powerful Republicans .

Any sidelining of Musk’s political ambitions is expected to offer some relief to Tesla shareholders, who had grown increasingly concerned that he was becoming distracted from his responsibilities at the electric car-maker.

Source: Investing

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Michelle

Economic

Forex

Last month's decision by the U.S. Federal Reserve to hold interest rates unchanged prompted dissents from two top central bankers who wanted to lower rates to guard against further weakening of the job market, and a readout of that two-day gathering on Wednesday could show whether their concerns had started to resonate with other policymakers, perhaps reinforcing expectations that borrowing-cost reductions could begin next month.

Not even 48 hours after the conclusion of the July 29-30 Federal Open Market Committee meeting, data from the Labor Department appeared to validate the concerns of Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller when it showed far fewer jobs than expected were created in July, the unemployment rate ticked up and the labor force participation rate slid to its lowest since late 2022. More unsettling, though, was an historic downward revision for estimates of employment in the previous two months.

That revision erased more than a quarter of a million jobs thought to have been created in May and June and put a hefty dent in the prevailing narrative of a still-strong-job market. The event was so angering to President Donald Trump that he fired the head of the Bureau of Labor Statistics.

Data since then, however, has provided some fodder for the camp more concerned that Trump's aggressive tariff regime risks rekindling inflation to hold their ground against moving quickly to lower rates. The annual rate of underlying consumer inflation accelerated more than expected in July and was followed by an unexpectedly large jump in prices at the producer level.

"The minutes to the Jul Federal Open Market Committee will give a more nuanced sense of the split on the committee between the majority that voted to leave rates on hold and the dovish bloc led by dissenting Governors Miki Bowman and Christopher Waller," analysts at Oxford Economics wrote ahead of the minutes release, set for 2 p.m. ET (1800 GMT) on Wednesday. "However, the minutes are more stale than usual since they predate the revised payroll figures, which prompted a rapid repricing of the probability of a September rate cut."

Heading into the release of the minutes, CME's FedWatch tool assigns an 85% probability of a quarter-point reduction in the Fed's policy rate from the current range of 4.25%-to-4.50%, where it has remained since December.

Another reason the minutes may feel stale on arrival is they come just two days before a highly anticipated speech from Fed Chair Jerome Powell at the annual economic symposium near Jackson Hole, Wyoming, hosted by the Federal Reserve Bank of Kansas City.

Powell's keynote speech on Friday morning - set to be his last Jackson Hole address as Fed chair with his term expiring next May - could show whether Powell has joined ranks with those sensing the time has come for steps to shield the job market from further weakening or if he remains in league with those more wary of inflation in light of its moves away from the central bank's 2% target.

The lack of Fed rate reductions since Trump returned to the White House has agitated the Republican president, and he regularly lashes out at Powell for not engineering rate cuts. Trump is already in the process of screening possible successors to Powell and after the unexpected resignation earlier this month of one of the seven Board of Governors members, he has a chance to put his imprint on the Fed soon. He has nominated Council of Economic Advisers Chair Stephen Miran to fill the seat vacated by Adriana Kugler, a term that expires at the end of January. It is unclear whether Miran will win Senate confirmation before the Fed's September 16-17 meeting.

Source: Kitco

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Adam

Stocks

Economic

Britain's FTSE 100 held steady on Wednesday as gains in consumer and healthcare sectors offset losses in energy and mining stocks, while investors assessed a hotter-than-expected inflation report.

As of 0945 GMT, the blue-chip index FTSE 100 was largely flat. Meanwhile, the FTSE midcap index dropped 0.4%, on pace to mark its steepest fall in over two weeks.

The UK's consumer price inflation hit its highest in 18 months in July when it increased to 3.8% from 3.6%, once again leaving the country with the fastest rate of price increases among the world's largest rich economies.

"Inflation was always likely to rise today, but this report is definitely on the hotter side," said Luke Bartholomew, deputy chief economist at Aberdeen.

"In particular, services inflation, which the Bank of England watches very closely as a measure of underlying inflation pressure, popping higher will be a source of concern among policymakers."

The data led to a shift in market expectations on BoE's monetary policy, with traders now betting on a quarter-point reduction in March next year. Earlier this month, markets had anticipated a cut before the end of 2025.

Sterling also strengthened slightly following the data release.

The inflation report's interest rate implications led to a 1.3% fall in homebuilders on concerns about mortgage affordability.

Energy sector declined 0.7% as heavy-weight BP dropped 1.3% after the oil major said operations at its refinery at Whiting, Indiana, were affected due to flooding.

Metal mining stocks dropped 0.8%.

Aerospace and defence index came under pressure for a second consecutive day, dipping 1.2%, after marking its largest single-day decline since early April in the previous session.

On the flip side, consumer stocks and healthcare companies supported gains on the blue-chip index, rising 0.7% and 0.5% respectively.

Among individual movers, Ithaca Energy jumped 8% after the oil and gas company lifted its 2025 production forecast.

Medical equipment maker Convatec rose 5.5% after it announced $300 million share buyback programme.

Source: Reuters

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Warren Takunda

Economic

Central Bank

UK inflation, the headlines:

CPI annual inflation rose to 3.8% in July 2025, up from 3.6% in June.Services inflation rose from 4.7% in June to 5.0% in July, driven by airfares, package holidays, and insurance.Food inflation rose to 4.9%.Market-implied odds of a Bank of England rate cut in November close to 0%.

"Another hawkish blow to the MPC means no more cuts this year. The doves on the MPC have taken a battering over the past week. July’s figures show sticky underlying services inflation and are another blow to those on the MPC that argued hard at the August meeting about the disinflationary process being underway." - Elliott Jordan-Doak, Senior U.K. Economist at Pantheon Macroeconomics

"The Bank of England has been clear that government policies, which have driven up the costs of employment, are fuelling price rises at the till, while poor harvests and global instability have also added further cost pressures." - Kris Hamer, Director of Insight at the British Retail Consortium.

"The risk is this price persistence triggers renewed second round effects. That could yet derail the MPCs assumptions for a further, more intense, cooling of wage pressures into year-end." - Sam Hill, Head of Market Insights at Lloyds Bank.

Inflation "Another Hawkish Blow" to Bank of England: Economist Responses_1

Chart: Until services inflation falls, headline CPI won't hit the target 2.0% on a sustainable basis.

"The perverse rate cut earlier this month looks even more ridiculous and irresponsible in the light of this news. 4pc plus inflation is coming in the autumn!" - Andrew Sentance, an economist who formerly served on the Bank's Monetary Policy Committee.

"The uptick in inflation comes after the Bank of England cut rates earlier this month. That’s an unfortunate look, although economists can argue that the rise in air fares may be a one-off. There was a swift market reaction to the data as traders started to price out the probability of further cuts in the near term. This saw sterling rally and FTSE 100 stock index futures fall." - David Morrison, Senior Market Analyst at Trade Nation.

Inflation "Another Hawkish Blow" to Bank of England: Economist Responses_2

Chart: We're increasingly prone to underestimate inflation. Image courtesy of Lloyds Bank.

"Another interest rate cut is not likely in the next few months, it’s touch and go for December, with a reduction not fully priced in by financial markets until the spring. This is likely to keep gilt yields higher, and cause continued headaches for the government, given it pushes up borrowing costs, and keeps the public finances in a fragile state," - Susannah Streeter, head of money and finance, Hargreaves Lansdown.

Sanjay Raja, Chief UK Economist at Deutsche Bank:

Why the surprise? In short, the ONS’ price collection day was later than usual, just about coinciding with the summer school holidays.

Why does this matter? Prices for airfares and sea-fares tend to be more volatile later in July as demand picks up. In fact, according to the ONS airfares were up a staggering 30% m/m – the highest monthly increase going back to 2001.

The good news? Most of this will unwind in the next month or so.

The bad news? Cost of living pressures remain with food prices on the up and pump prices still on an ascent. With food inflation topping the Bank of England’s forecasts, concerns around inflation expectations will be hard to shake off for the MPC.

Inflation "Another Hawkish Blow" to Bank of England: Economist Responses_3

Chart: UK inflation increasingly an outlier.

"After falling to the 2% target in the final two months of the last government, UK CPI inflation has now diverged sharply again from the euro area. This divergence mainly reflects increases in government-set prices, higher taxes, and higher housing costs." - Julian Jessop, independent economist, IEA Economics Fellow.

"The risk of stagflation is very real. If the UK is heading towards the economic "worst of all worlds", it’s not clear what the central bank or the government should do about it." - Nicholas Hyett, Investment Manager at Wealth Club.

"As far as the Bank is concerned, we are still on track. The key question is whether the elevated inflation we see on the way embeds itself in expectations, and impacts price and wage-setting in the medium-term. For now, the combination of faster price rises and resilience in real GDP growth will see Bank sticking to its ‘gradual and careful’ approach, with markets expecting one more cut at most this year." - Adam Deasy, Economist at PwC.