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3 June 2025,07:20

Daily Market Analysis

Dollar Plummets to Fresh Low as Trade Concerns and Weak Data Fuel Selloff

3 June 2025, 07:20

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 Key Takeaways:

*The U.S. dollar faces headwinds as the market pivots accordingly with the new tariff threat from President Trump. 

*The U.S. ISM PMI readings came short, dampening the U.S. dollar’s strength.  

Market Summary:

The U.S. dollar extended its decline, sinking to a new low of $98.58 in the previous session as market sentiment soured over former President Trump’s proposed tariff policies. Investors grew increasingly wary that renewed trade barriers could damage the U.S. economy and exacerbate fiscal concerns, particularly regarding the government’s ability to meet its debt obligations. The greenback’s weakness was further compounded by disappointing ISM PMI data, which fell short of market expectations and pointed to deteriorating economic conditions.

With the dollar entrenched in a bearish trend, attention now shifts to Wednesday’s ADP Nonfarm Employment Change report. This key labor market indicator will be critical in assessing whether the dollar’s downward momentum will persist or if signs of economic resilience could stem the selloff. A weaker-than-expected jobs figure may reinforce concerns over U.S. economic health and push the dollar lower, while a positive surprise could provide temporary relief.

The combination of political uncertainty, softening economic data, and looming trade risks has created a challenging environment for the dollar. Unless upcoming data delivers a meaningful upside surprise, the currency may struggle to reverse its current downtrend in the near term.

Technical Analysis 

Dollar_index, 4H: 

The U.S. Dollar Index has continued its downward slide, breaking to a fresh one-month low at 98.58 as bearish momentum builds. This decline has completely erased the index’s gains from its previous rebound, leaving it vulnerable to further losses as it approaches a critical support zone around the 98.00 level. A decisive break below this psychological support could open the door for more substantial declines, potentially pushing the dollar to levels not seen in three years.

From a technical perspective, the momentum indicators reinforce the bearish outlook. The Relative Strength Index has drifted toward oversold territory, reflecting sustained selling pressure, while the MACD’s failure to cross above the zero line indicates persistent weakness in buying interest. These technical signals suggest the current downtrend may have further room to run before finding meaningful support.

Resistance Levels: 100.30, 101.90

Support Levels: 98.10, 96.55

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