Insights 
VT 
Key points
- The US Dollar Index (USDX) nudges up 0.1% to 97.488 after tariffs on Japan are set at 15% instead of the feared 25%
- Japan commits to investing $550 billion in the US, easing global investor anxiety over trade fallout
The US dollar is showing early signs of life after President Trump struck a fresh trade deal with Japan. The agreement includes a 15% tariff on Japanese goods, well below the 25% rate he had threatened in a letter earlier this week.
That moderation has brought a dose of relief to the currency markets, with the USDX dollar index climbing 0.1% to 97.488 as of the latest update.
The breakthrough opens the door to further investment inflows. Japan’s pledge to inject $550 billion into the US economy adds longer-term support for the greenback, particularly amid ongoing global uncertainty.
Additional deals are also in motion, with revised trade terms unveiled for the Philippines and a developing agreement with Indonesia.
Technical Analysis
The US Dollar Index continued its intraday slide before finally finding a floor at 97.009, where buyers stepped in to prevent further losses. Price action on the 15-minute chart shows a slow, sideways recovery since, though momentum remains tepid.
Picture: USDX tries to claw its way back above 97, as seen on the VT Markets app
The MACD has crossed above the signal line, but with minimal volume and a flat histogram, signalling a weak recovery phase rather than a confirmed reversal.
The moving averages are beginning to converge, and price is attempting to reclaim the 97.15 region—where 30-MA resistance is currently capping upward movement.
Bulls will need a decisive break above 97.27 to shift the intraday structure into bullish territory. Until then, caution dominates.
Powell Debate Adds to the Mix
While trade rhetoric has cooled, political noise around the Federal Reserve continues to simmer. US Treasury Secretary Scott Bessent told Fox Business that Fed Chair Jerome Powell should remain in his post, even after previously calling for a review of the central bank’s operations.
Bessent’s comments serve as a reminder that policy credibility still matters in FX markets. With the Fed’s credibility under watch, any volatility in forward guidance or unexpected dovish turns could reignite downside pressure on the dollar.
Cautious Forecast
As it stands, the dollar’s floor at 97.00 looks intact—at least temporarily. If macro noise settles and economic data holds steady, USDX could drift higher toward 97.50–97.60.
However, traders should remain alert. Any renewed Fed uncertainty or souring trade rhetoric could cap upside and drag the index back to test support. For now, it’s a tentative recovery—not a trend shift.
