Trump's speech shatters peace expectations, and the US dollar experiences a phased rebound.

**Huitong Finance App News——**On Friday (April 3) during the European session, President Trump’s public remarks this week completely reversed the foreign-exchange market’s short-term expectations for the U.S. dollar. Before that, global investors generally bet that geopolitical conflict would gradually ease and the situation would cool down; as a result, many funds reduced their holdings of the dollar and increased allocation to risk assets. But once the remarks released tough signals, the market’s hopes for a peaceful resolution of the conflict were quickly dashed. Investors immediately shifted to defensive asset allocation. With the U.S. dollar as the world’s core safe-haven currency, it rode the momentum and received massive buy-side support, carving out a rapid rally.

In addition, with the U.S. nonfarm payroll employment report set to be released this Friday, market participants generally did not want to hold U.S. dollar short positions heading into the weekend. Defensive sentiment and a cautious mindset ahead of the data converged, providing the dollar with solid bottom support. However, after a rapid surge higher, some funds chose to take profits, which caused a modest intraday pullback in the dollar—normal volatility during an ongoing uptrend.

Technical Analysis

Based on technical patterns, judging by the daily swing indicators, the U.S. Dollar Index’s current medium-term primary trend is still upward, with the short-term having entered a period of range-bound consolidation and adjustment. If price effectively breaks down below the 98.880 level, the primary trend will turn to the downside; if it breaks above the recent swing high of 100.643, it would imply that the uptrend will restart, opening up a fresh round of upside room.

Meanwhile, the short-term secondary trend is also upward. Once it loses the short-term swing low of 99.298, market bulls’ momentum will clearly weaken, and price may enter a deeper pullback and adjustment.

In addition, the trend line at 99.712 also plays a key role in guiding price action. Since the U.S. Dollar Index touched a phase low of 95.551 on January 27, this trend line has been supporting the current upswing. On Wednesday this week, the U.S. Dollar Index briefly dipped below this trend line, but it quickly recovered the very next day, highlighting the strong support effect of this level. The current price is still trading above the trend line, and the medium-term rally structure remains intact.

( U.S. Dollar Index daily chart | Source: Easy Forex Services )

The U.S. Dollar Index’s main support levels are concentrated in two key moving averages: the 200-day moving average at 98.443 and the 50-day moving average at 98.381. The current 50-day moving average has already completed a bullish crossover over the 200-day moving average, forming the classic “golden cross” signal. This will provide strong technical support for the dollar’s medium-term uptrend. If it can hold the moving-average support, a further acceleration of the rebound is possible.

The U.S. Dollar Index’s recent upside target level is the March 31 high at 100.643. If it can strongly hold above and stay at this level, it will likely trigger a powerful upside breakout. The next potential target can be looked at around 101.977. For the short term, traders should watch the 99.70–99.90 range for consolidation, and remain alert to further pullbacks driven by profit-taking.

As hopes for peace fade, safe-haven demand lifts the dollar’s medium-term uptrend

Trump’s remarks clearly conveyed a signal to the market: the current geopolitical conflict is unlikely to end in the short term, and in the coming weeks there may be more aggressive military actions. The market reacted extremely sensitively to this signal. Risk appetite in the market quickly turned pessimistic. Trading funds massively withdrew from equities and commodities—high-risk assets—and flowed back into U.S. dollar assets for safety. In the author’s view, this switch in fund flows is exactly the core logic behind the dollar’s rise this round, and the driving factor has not disappeared due to the short-term pullback.

Oil prices, Treasury yields, and the dollar rise in tandem—medium-term support logic remains unchanged

After Trump’s speech, international crude oil prices surged sharply. This development triggered two market spillover effects at the same time, providing sustained support for the dollar. On one hand, higher oil prices directly lifted market inflation expectations, forcing the Federal Reserve’s rate-cut cycle to be delayed and causing Treasury yields to remain at elevated levels. On the other hand, rising oil prices also intensified concerns about slower global economic growth, further suppressing the performance of risk assets. Both of these market outcomes are direct positives for the dollar. When inflation, yields, and risk sentiment simultaneously point toward the U.S. dollar, the underlying logic of the medium-term rise follows naturally and will not be changed by single-day short-term fluctuations.

Nonfarm data is imminent—market wait-and-see sentiment dominates short-term swings

The U.S. nonfarm payroll employment report to be released this Friday is the core variable affecting the dollar’s short-term trajectory. Although the market generally expects this nonfarm report to show only moderate job growth, in the face of this major piece of data capable of stirring global FX markets, virtually no investors are willing to hold U.S. dollar short positions before the data is released.

At the point when data release and the weekend market closure overlap, holding U.S. dollar shorts undoubtedly faces a very high level of uncertainty risk. Most traders choose to avoid this risk exposure, which also provides the dollar with bottom support. However, some bulls choose to take profits ahead of the data, leading the dollar to dip slightly after the surge. On Thursday, the overall logic of the dollar’s movement was clear: the market first prioritizes asset safety, risk sentiment is broadly cooling down, the medium-term strong trend for the safe-haven currency U.S. dollar remains unchanged, and the short term moves into a wait-and-see, range-bound consolidation phase.

(Chief Editor: Wang Zhiqiang HF013)

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