The US Dollar fell sharply following comments from US Treasury Secretary Scott Bessent about dropping US yields due to the Trump administration’s policies. This led to a sell-off impacting Gold, Bitcoin, and the Dollar, resulting in increased losses.
The decline began after the administration detailed tougher semiconductor restrictions on China, intending to slow down its technological development through tariffs. Key economic indicators such as Consumer Confidence and Federal Reserve manufacturing indexes are due for release today.
Equities dropped over 1%, while the Fed’s interest rate cut probability for June rose to 50%. The US 10-year yield has decreased to 4.28%, down from 4.574% last week.
The US Dollar Index is sidelined, with the 100-day Simple Moving Average potentially limiting increases near 106.68. Levels like 107.97 might be tested if US yields recover, while further declines could attract market buyers near 105.89.
The Federal Reserve’s monetary policy, based on price stability and employment, adjusts interest rates to influence the Dollar’s value. Meetings occur eight times a year to assess economic conditions and determine policy, utilizing tools like Quantitative Easing or Quantitative Tightening.
Bessent’s remarks struck a nerve in the markets, kicking off a sharp drop in the Dollar as yields came under pressure. His assessment highlighted the impact of the administration’s fiscal choices, prompting traders to offload the currency while also hitting demand for Gold and Bitcoin. As a result, losses piled up across multiple asset classes, with equities tumbling over a full percentage point.
What fuelled the move was Washington’s decision to clamp down on China’s semiconductor progress, using tariffs as a tool to restrain development in a sector pivotal to future innovation. Such measures can heighten economic tensions, driving investors to reassess their positions—particularly in assets sensitive to global trade dynamics.
With confidence data and Federal Reserve manufacturing figures due today, short-term traders should stay alert. Economic sentiment plays a role in shaping policy expectations, and any surprise readings could rattle hedging strategies or reinforce existing trends.
Bond markets have displayed a notable shift, with the 10-year yield slumping to 4.28%—a sizeable drop from last week’s 4.574%. Meanwhile, expectations for a rate cut in June now sit at 50%, showing that traders are pricing in a softer stance from policymakers. The bond market’s trajectory tends to be a leading signal for broader financial conditions; weaker yields can continue to weigh on the Dollar if sentiment holds.
Technical traders are eyeing the US Dollar Index, which remains constrained, with the 100-day Simple Moving Average acting as a hurdle near 106.68. If yields stage a recovery, a test of 107.97 may be in play, but should selling pressure persist, buyers could step in around 105.89.
As the Federal Reserve assesses inflation and employment conditions, its decisions on rates directly affect the currency. Meetings occur eight times a year, providing regular adjustments to policy through mechanisms like Quantitative Easing or Tightening. These shifts dictate liquidity levels and influence broader risk appetite, making each release a necessary event on the trading calendar.
