Top.Mail.Ru
empty
06.05.2025 12:50 AM
The Dollar Sell-Off Shows No Signs of Slowing Down

The latest CFTC report reveals that the dollar sell-off continues unabated. Weekly changes against major currencies amounted to -$3.1 billion, bringing the total accumulated short position to -$17.1 billion.

This image is no longer relevant

One of the reasons the dollar has struggled to regain momentum is China's refusal to yield to pressure from Donald Trump. The U.S. and China remain at odds over whether trade negotiations have begun. Trump claimed several times last week that discussions with China had taken place, which Beijing denied. Meanwhile, U.S. Treasury Secretary Scott Bessent — who appears to be leading the trade talks — stated that he was unaware of any conversation between Trump and Xi. Meanwhile, shelves in major U.S. retail chains are being emptied, and price increases are looming unless tariffs are reduced soon. Container shipping data shows that trade between the two countries has nearly stopped, as importers have stopped placing orders. American farmers also see a significant decline in exports to their largest foreign market.

China's defiance appears to have placed it in a stronger position than Trump had anticipated. Negotiations may be underway behind the scenes, but they are kept quiet until a tangible — even if temporary — result is achieved to ease tensions. With no visible progress, the dollar remains under mounting pressure as time works against the U.S. On Monday, the dollar weakened again as speculation grew that several Asian countries may consider revaluing their currencies to pressure the U.S. into making concessions.

The swap market has not revised its outlook for the Federal Reserve's rate trajectory, and it is still pricing in three cuts this year. Nothing in the recent data has been enough to shift that view, as the latest GDP and labor market reports painted a blurred and contradictory picture. First-quarter GDP showed an annualized decline of -0.3%, mainly due to a surge in imports in anticipation of new tariffs. Domestic demand remains stable and is not yet a cause for concern. Preliminary labor data indicated declines (ADP, job vacancies, and job indices) and weaker consumer activity. However, Friday's official report surprised with stronger-than-expected job growth.

The upcoming FOMC meeting on Wednesday carries a low probability of a rate cut. All attention will be on Jerome Powell's press conference, where he will face intense pressure. Trump has repeatedly said he expects a rate cut from the Fed and has hinted at the possible dismissal of Powell — though he recently walked that back to reassure markets. The mere threat of pressure on the Fed has pushed bond yields lower. As a result, Powell may issue a direct signal that a rate cut is possible in June. If markets pick up on such a hint, it could trigger a renewed wave of dollar sell-offs.

The S&P 500 stock index rose last week, but the rally was largely psychological — driven by expectations that Trump's tariff policy might eventually pay off. Additionally, the earlier drop starting in February was so sharp that a correction was inevitable. The index had lost 50% of its gains over the prior 28 months.

This image is no longer relevant

Still, in the long term, we expect that once the current correction ends, the index will resume its decline. A U.S. recession now appears almost inevitable. Our long-term target is 5130. A move to this level could unfold quickly or gradually, depending on the political landscape and how soon the U.S. economy's weakening fundamentals become undeniable. Global trade is now a black box—anything could come from it.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/JPY. Analysis, Forecast, and Current Market Situation

Intraday demand for the Japanese yen remains steady, accompanied by broad-based U.S. dollar weakness, contributing to the decline in the USD/JPY pair. Rising expectations that the Bank of Japan

Irina Yanina 12:55 2025-06-26 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are showing moderate gains for the second consecutive day, though they remain below the 3,350-dollar level. Intraday demand for the Japanese yen persists alongside broad U.S. dollar weakness

Irina Yanina 12:34 2025-06-26 UTC+2

USD/CHF. Analysis and Forecast

The USD/CHF pair has remained under pressure for the fourth consecutive day, falling back to levels last seen in 2011. Bearish sentiment toward the U.S. dollar persists amid concerns over

Irina Yanina 12:04 2025-06-26 UTC+2

Trump Again Criticizes the Fed for Being Too Slow

On Wednesday, the U.S. dollar sharply declined against major currencies after President Donald Trump stated that he has three or four candidates in mind to replace Federal Reserve Chair Jerome

Jakub Novak 10:59 2025-06-26 UTC+2

Investors Recall the Chronic Weakness of the Dollar (Further Decline in #USDX and USD/JPY Possible)

The markets continue to be dominated by the theme of Iran-Israel negotiations, previously initiated by the United States. Whether actual agreements are reached or not will have a noticeable impact

Pati Gani 09:19 2025-06-26 UTC+2

The Market Has Found a Cure for All Troubles

It seems that the heavens are aligned with Donald Trump's desires. The U.S. President's successes in the Middle East have led to a new perspective on the policies pursued

Marek Petkovich 09:04 2025-06-26 UTC+2

What to Pay Attention to on June 26? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Thursday, and the market this week has shown a clear intention to continue the upward trend that has lasted for five months. Yesterday

Paolo Greco 07:16 2025-06-26 UTC+2

GBP/USD Overview – June 26: July 9 Is Approaching

The GBP/USD currency pair remained stagnant for most of Wednesday. Let's recall an old technical signal: if the price updates a significant extreme and immediately pulls back, there

Paolo Greco 03:39 2025-06-26 UTC+2

EUR/USD Overview – June 26: Jerome Powell Said Nothing New

The EUR/USD currency pair remained completely calm throughout Wednesday. Let's recall that this week began with a storm, provoked—of course—by Donald Trump, who first announced a ceasefire between Iran

Paolo Greco 03:39 2025-06-26 UTC+2

The Euro Regains the Initiative

The euro is attempting to resume its upward movement, although not many economic reasons support this scenario. Inflation in May rose in line with the ECB's expectations, which only strengthened

Kuvat Raharjo 00:43 2025-06-26 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.