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The US Index V cannot hide its fatigue. Can non-agricultural products become a "life-saving straw"?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The US Index V cannot hide its fatigue, can non-agricultural products become a 'life-saving straw'?" Hope it will be helpful to you! The original content is as follows:
Asian Handicap Market Review
On Thursday, the heads of Chinese and US dollars talked on the phone, and the US dollar index reversed V-shaped reversal, but it remained below the 99 mark. As of now, the US dollar price is 98.78.
U.S. manufacturing activity shrank for the fourth consecutive month in May, with trade-related data highlighting the impact of tariffs.
Tariffs
①European and American trade officials will meet on Wednesday, and the EU reiterates a warning for counter-tariff ② Foreign media: Seeking to speed up negotiations, Trump requires countries to make "best offers" before Wednesday ③ The Trump administration appeals the federal district court of the District of Columbia to rule that its tariff policy is "illegal". ④ Japanese Prime Minister: There is no intention to make concessions on the issue of US tariffs.
Trump Musk broke up: The two sides argued with each other with high intensity, and Tesla's market value evaporated by $150 billion.
Trump said it is difficult to promote an immediate ceasefire from Russia and Ukraine in a short period of time, and hinted that it may sanction both Russia and Ukraine at the same time.
Trump has xmaccount.completely suspended citizens from entering the United States from 12 countries and announced visa restrictions on Harvard international students. Harvard University decided to sue the U.S. government again.
The number of initial unemployment claims in the United States surged to an eight-month high; the U.S. trade deficit dropped by 55.5% to $61.6 billion due to the sharp drop in imports caused by Trump tariffs.
The ECB lowered three key interest rates by 25 basis points. Lagarde hints interest rate cut weekThe period will end, and the market will no longer fully price and cut interest rates by another 25 basis points this year.
Summary of institutional views
Analyst Matt Simpson: Don't underestimate the US dollar for the time being, the high support level "change" may imply...
Most people continue to underestimate the US dollar on fundamentals. Asset management xmaccount.companies are also the most bearish on the US dollar index since 2011. In fact, traders short the US dollar at the most bearish level since September. This alone does not guarantee a strong bullish reversal is xmaccount.coming, but it certainly serves as a warning. Whether the rebound is large or small is likely to depend on Trump. If a trade deal is reached, the dollar appears to have a short rebound—and gold prices may also experience a deep pullback. If trade negotiations are delayed, there may only be a small technical rebound.
At the daily level, the US dollar is still in a significant downward trend. The typical head and shoulder top form should have been a sharp drop after a decisive breakthrough in the right shoulder and the neckline near 98.67. However, the downward momentum near the neckline was almost zero, and a small bullish cross star was formed at the December low, and the daily RSI also diverged. Therefore, the head and shoulders top pattern of the US dollar has shown signs of failure, because the bearish momentum has almost dissipated since the break below the trend line. In fact, small bullish crosses on the daily chart and large bullish pinbars on the 4-hour chart indicate a bullish rebound.
On the 4-hour chart, there is a bullish pinbar in the US dollar, accompanied by extremely high trading volume. The K-line chart also shows a higher positive incremental trading volume—which means that the bulls are more motivated than the bears. In other words, it seems that a "change" has occurred, turning from shorts to longs. So I think the dollar will at least rebound slightly. While this does not necessarily mean Thursday’s low (98.30) is the final low, any pullback to that level may provide counter-trend traders with an opportunity to increase their positions at a wider stop loss and seize the opportunity to rise to 99.4. Breakthrough of 99.4 will make the 100-100.44 area the focus.
Analyst David Scutt: The range of the United States and Japan is about to be threatened, and shorting at highs may be more cost-effective
Before the non-agricultural data tonight, the United States and Japan traded in the second half of the recent range. This week, the United States and Japan failed to stabilize at 144 levels many times, but they rebounded from around 142.42 many times below, which also provides investors with a clear range operation strategy. Currently, the RSI is slightly below 50 and shows a downward trend. The MACD is located below the signal line and is in a negative area, and the momentum is downward, which indicates that in the current environment, shorting at highs may be more risk-reward than buying at lows.
In the downward trend, after the United States and Japan fell below 142.42, the May 27 low of 142.12 will become the next level worth paying attention to. Losing here may make the level below 142 re-energize. Although the short-term support level is 141.65, it has recently fallen below 142.The range often reverses quickly—unless the market experiences extreme pressure. Therefore, only if the United States and Japan xmaccount.completely break below 141.65 can it increase the possibility of testing the April volatility low of 139.88 again.
In the upward trend, after breaking through 144, the next level worth paying attention to in the United States and Japan is Wednesday's high of 144.4. Breakthrough here may trigger an upward towards the 50-day moving average resistance level 146, depending on the details of the non-agricultural data and the reaction of the risky assets. Recently, strong economic data have triggered positive reactions to all risky assets, although this reduces the likelihood of the Fed's recent rate cuts – suggesting that for now, good news remains good news.
Goldman Sachs: Japanese bond purchase "speed reduction" - the three major difficulties of the Bank of Japan in maintaining policy unchanged in June
It is expected that under the high uncertainty, from the perspective of risk management, the Bank of Japan will maintain interest rates unchanged in June while maintaining its gradual interest rate hike position. We maintain the view that the Bank of Japan will only hold its next rate hike in January 2026 meeting, but the uncertainty of the timing is still high. Affected by US tariff policies and overseas economic trends, the opportunity for interest rate hikes may be further delayed. On the other hand, if the United States significantly reduces Japanese automobile tariffs, thereby alleviating concerns about downward pressure on wages and prices by reducing exports and reducing export-oriented xmaccount.companies' profits, interest rate hikes may be advanced.
Regarding the Bank of Japan's interim assessment of its current Japanese Treasury bond purchase reduction plan (until March 2026), we expect the current plan to be maintained because the recent deterioration in market operations and a significant increase in ultra-long-term Treasury bond purchases are not directly caused by the Bank of Japan's purchase reduction so far.
After that, we expect the Bank of Japan to continue to cut purchases, which, despite a slowdown, will reach a monthly level of about 2 trillion yen in the next year, in line with the scope of the Bank of Japan's prior survey of market participants and is consistent with the level before the QQE launch. We believe that the recent rise in volatility of ultra-long-term Japanese Treasury bond yields will not affect the Bank of Japan's position to steadily reduce the amount of Japanese Treasury bond purchases.
UBS: Continue to build long positions at the Euro X level, with the target above aiming...
We believe that tariff hikes and ongoing uncertainty will cause greater damage to the U.S. economy (and the U.S. dollar) than most other economies. Due to weak U.S. economic data, we expect the Fed to restart its easing cycle in the second half of the year. Although the euro has a spread disadvantage of more than 2%, due to its liquidity and market depth, the euro remains the preferred currency when looking for a U.S. dollar alternative.
In view of the many downside risks the US dollar faces, we believe that in the xmaccount.coming months and quarters, international investors may use the US dollar rise to reduce or hedge their US dollar positions, limiting any potential upside potential. We expect the euro to enter the 1.15-1.20 range soon and believe that the possibility of a decline to 1.10 is less likely, and it is only temporary. Therefore, we tend toTo build long positions using the euro-USD level between 1.12-1.14, the goal is to enter the 1.15-1.20 range.
The above content is about "[XM Foreign Exchange Decision Analysis]: The US Index V cannot hide its fatigue. Can non-agricultural products become a 'life-saving straw'?", which was carefully xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your transactions! Thanks for the support!
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