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2 July 2025,03:12

Daily Market Analysis

Dollar Wobbles Ahead of Key Stimulus Vote as Trade Risks Loom

2 July 2025, 03:12

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 Key Takeaways:

*Dollar Index trades near multi-month lows amid stimulus uncertainty.

*Trump’s tax bill cleared the Senate; all eyes on House vote July 3.

*U.S. debt and fiscal risk weigh on dollar sentiment.

*Trade tensions resurface, with Trump reaffirming July 9 tariff deadline.


Market Summary:

The U.S. Dollar Index remained under pressure, hovering near its lowest levels in months as investors await clarity on President Trump’s multi-trillion-dollar stimulus and tax reform bill, which just cleared the Senate with Vice President JD Vance’s tie-breaking vote. The bill includes major tax cuts, revisions to Medicaid, and key changes to the SALT deduction.

While Senate approval marked a milestone, its passage in the House remains uncertain. A vote is expected by Wednesday, July 3, and the outcome could significantly shift dollar sentiment. If passed as-is, the bill could be signed into law by July 4. However, if the House pushes for amendments or rejects the proposal, legislative delays could dampen market confidence further.

In parallel, the U.S. debt burden remains a structural concern. A sizable stimulus package may worsen fiscal imbalances, weighing on the dollar’s long-term appeal. Traders are also eyeing potential credit rating risks should fiscal discipline continue to erode.

Trade tensions added to the cautious tone. President Trump reaffirmed his July 9 deadline for imposing higher tariffs on countries that fail to reach trade agreements with the U.S., raising the stakes for Japan and other non-compliant nations. While several major players including the EU, UK, and China have made progress, the threat of new tariffs remains a wildcard for risk sentiment and the dollar outlook.

With multiple risks still unfolding, the dollar is likely to remain under pressure in the near term as markets reassess the outlook for U.S. policy and its implications for global capital flows.

Technical Analysis 

Dollar_Index, H4: 

The U.S. Dollar Index is trading lower following a recent break below prior support. However, technical indicators point to a potential shift in short-term momentum. The MACD suggests diminishing bearish pressure, while the Relative Strength Index (RSI) has rebounded to 35 after approaching oversold territory.

If RSI continues to recover and forms a golden cross, a short-term technical correction could occur. In this scenario, the Dollar Index may attempt to retest the 97.10 resistance level, with further upside potential toward 98.30. Conversely, if downward momentum resumes, support levels at 96.25 and 95.75 remain in focus.


Resistance Levels: 97.10, 98.30
Support Levels: 96.25, 95.75

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