empty
21.05.2025 12:26 AM
The Dollar Regains Its Spirit

As the CFTC report showed, investors are still not very impressed that the US and China have managed to reduce trade tensions and take a pause for negotiations - the combined short position in USD against major currencies decreased by only 0.7 billion, bringing the total to -$16.7 billion.

This image is no longer relevant

The S&P 500 index staged an impressive rebound after one of the most dramatic sell-offs in history, returning to the level it held before the start of the tariff wars. However, doubts remain about the sustainability of this rally.

It's worth noting that the U.S. market wasn't the only one rallying—Canada hit an all-time high, while China, South Korea, Australia, and several European countries also posted record highs. The primary driver, of course, was the decline in global risks, which could have spiked if Trump's team had pushed its interpretation of fairness more aggressively.

The University of Michigan Consumer Sentiment Index dropped sharply in May from 52.2 to 50.8—almost hitting a historic low—and it's now declining faster than it did at the height of the COVID crisis. Meanwhile, inflation expectations have risen: the 1-year outlook jumped to 7.3%, the highest since 1981 (during the energy crisis), and the 5-year outlook climbed from 4.4% to 4.6%. In other words, consumers see the inflation picture quite differently despite seemingly clear signs of disinflation.

A federal budget surplus report showing a surplus of $258.4 billion—the second-largest on record—supported the dollar's strength. However, the evidence of slowing inflation remains unconvincing, at least for now. Inflation expectations among both businesses and consumers are rising, not falling, contradicting official data.

The U.S. dollar appears stronger than it was a week ago and is expected to strengthen further against most competitors in the short term. However, this strengthening is largely preventive in nature, as the outcome of the deal with China remains uncertain, and it's not even clear if there will be a deal at all.

We do not see strong grounds for a new all-time high or continued growth for the S&P 500 index.

This image is no longer relevant

After consolidating above the 5780 level, some additional upside was justified, but the signs of a looming recession in the U.S. economy are too obvious to ignore. We expect a reversal downward toward 5500. A less likely scenario is a move to 6150 followed by a later reversal.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

AUD/JPY. Analysis and Forecast

The AUD/JPY pair is regaining positive momentum after a modest pullback the previous day. However, spot prices remain confined within a multi-day range due to mixed fundamental signals, trading near

Irina Yanina 14:39 2025-06-20 UTC+2

USD/CHF: The Pair Struggles to Gain Momentum Amid Conflicting Forces

At present, USD/CHF shows no clear intraday direction and fluctuates within a narrow range just above the 0.8155 level, reflecting market uncertainty during the European session. The Swiss franc

Irina Yanina 14:36 2025-06-20 UTC+2

The Euro Will Retain Its Strength and Investor Interest

During her speech, IMF Managing Director Kristalina Georgieva stated that she sees the potential for the euro to play a broader role globally.Her remarks came amid growing geopolitical instability

Jakub Novak 11:25 2025-06-20 UTC+2

Euro Slightly Rises After Lagarde's Speech

The euro saw a modest recovery after European Central Bank President Christine Lagarde stated that expanding trade within the region could help offset losses resulting from global fragmentation. Her optimistic

Jakub Novak 11:10 2025-06-20 UTC+2

Donald Trump – A Mastermind of Geopolitical Uncertainty (A Potential Correction in Oil and Gold Prices)

Six months into Donald Trump's presidency, it seems he has already thoroughly exhausted the world with his "brilliant" initiatives, groundbreaking actions aimed at making America great again, and his vivid

Pati Gani 09:49 2025-06-20 UTC+2

The Market Tries to Extinguish the Fire

Markets are digesting Donald Trump's announcement that a decision on U.S. strikes against Iran will be made within two weeks. The White House could have acted at any moment

Marek Petkovich 09:01 2025-06-20 UTC+2

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.