USD: Downward pressure persists – MUFG Bank

💡 DMK Insight

The DXY dropping below 98.00 is a significant signal for traders: it indicates a potential shift in dollar strength and could impact various asset classes. With the DXY under pressure, we might see increased volatility in forex pairs, particularly those involving the euro and yen. Traders should watch for how this affects risk sentiment—if the dollar weakens further, commodities priced in dollars could rise, while equities might react positively. But here’s the flip side: a sustained drop in the DXY could also trigger concerns about inflation, leading to a flight to safety in bonds. Keep an eye on the 97.50 level as a potential support point; a break below that could accelerate the dollar’s decline. Also, monitor upcoming economic data releases that could influence Fed policy, as they might provide the catalyst for further movement in the DXY and related markets.