Trump’s Carnage! What’s Next for the Dollar and US Yields?

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US Dollar Weekly Analysis (5-minute read)

Overview

After a week of steady appreciation, a single post on social media from Donald Trump completely shifted the tone for the US Dollar. The post sparked fear, anger, and surprise among international players and market participants — adding to the uncertainty caused by the ongoing US government shutdown.

The trade war is back in full swing after a couple of months of relative calm between the US and China. In his Truth Social post, Trump stated that tariffs would need to be raised on Chinese goods entering the US as a response to China’s recent export controls on rare earth elements. According to Trump, this would ultimately benefit the US in the long run.



Market Reaction (Post Impact)

  • US Dollar Index (DXY) fell 0.55%, closing at 98.854

  • US 10-year yields declined 9.3 bps to 4.055%

  • Gold (XAU/USD) surged $38 to $4,012

  • EUR/USD rose 0.49%, closing at 1.1621

  • USD/JPY dropped 1.25%, closing at 151.12

  • WTI crude oil fell $2.70 to $58.81

  • Bitcoin dropped $4,224, to $116,950

  • S&P 500 fell 2.7%

  • Nasdaq dropped 3.49%

  • Dow Jones fell 2%

Technical Outlook (US dollar Index)

Weekly:

Although the US Dollar has been depreciating throughout the year, it is currently retracing the last bullish impulsive leg from 2021-2022. Price recently reacted to the uptrend line of the bullish Fibonacci channel, where buyers stepped in during the last few months of relative calm. With current geopolitical tensions, sellers may target the 78.6% retracement near the 95.00 level in the net months/years.



Daily & H4:
On the daily chart, price remains in a range between 100.000 and 96.000, forming an accumulation phase. The H4 chart, however, still shows a slightly bullish structure, suggesting potential continuation to the upside. Given the uncertainty and renewed volatility, it’s best to stay cautious and closely monitor both price action and evolving fundamentals.


US Yields Outlook

With the renewed trade tensions and a dovish Fed tone, yields are likely to continue drifting lower. The market clearly reacted to Trump’s post, as reflected in this week’s sharp drop in yields.

Final Thoughts

Don’t waste time trying to predict Trump. Instead, follow the narrative and adapt your bias as the story unfolds.


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