Dollar Dances Near 103: FOMC Minutes and Trump’s Tariff Pause Stir Markets

The US Dollar Index (DXY) is holding its ground near the 103 mark in Wednesday’s trading session, attempting to recover from a recent dip below 102.00 sparked by dovish Federal Reserve commentary. A modest bounce followed the release of the Fed’s March meeting minutes, which revealed policymakers grappling with “difficult tradeoffs” amid persistent inflation risks and slower growth projections. Adding to the mix, President Donald Trump’s unexpected 90-day suspension of most tariffs—excluding China—ignited a rally in equities, with the Dow Jones surging higher. However, the dollar’s technical outlook remains cautious, with bearish signals suggesting this recovery may face stiff resistance.

The Fed’s latest minutes painted a complex picture, with officials opting to keep interest rates steady as they navigate sticky inflation and emerging labor market risks. Policymakers expressed concern that inflation could prove more persistent than expected, while trade uncertainties and weakening GDP forecasts for 2025 and 2026 cloud the economic horizon. Despite these challenges, the Fed still anticipates eventual rate cuts, though the path forward hinges on balancing inflation control with employment support. Trump’s tariff pause, while boosting short-term market optimism, did little to ease long-term concerns about trade distortions and their inflationary impact.

From a technical perspective, the DXY’s attempt to stabilize near 102 is under scrutiny. The Moving Average Convergence Divergence (MACD) is flashing a sell signal, and the Relative Strength Index (RSI) sits at a neutral 40, hinting at limited momentum. Key moving averages, including the 20-day (103.63), 100-day (106.53), and 200-day (104.81), are trending downward, reinforcing bearish pressure. Resistance levels at 102.62, 103.21, and 103.38 loom overhead, while support at 101.83 is critical.

A break below this could see the dollar sliding toward the psychological 100.00 level, keeping traders on edge as the interplay of Fed policy and trade developments unfolds.