Pressure has been renewed in recent weeks, with the DXY index submerged towards a minimum of one month as data of soft inflation and caution comments of the president of the Federal Reserve, Jerome Powell, caused new bets on the target cuts. However, despite this weakness, the fundamental story behind the backback remains far from being bassist. In fact, macroeconomic resilience, global divergences, favorable performance differentials, technical signals and investor positioning suggest that the dollar may be preparing the scenario for another significant manifestation.
Macro Resilience vs. Market dovism
The Fed has communicated a data dependent posture, but the markets seem more and more anxious for the price in multiple cuts. From now on, the futures of the Fed funds imply a 70% probability of a September cut and almost two complete cuts at the end of the year. This market positioning contrasts with an adhesive coreal inflation, an still resistant labor market and a consumer that continues to spend. Powell's carefully written language avoids committing to cuts, and until the data deteriorates more significantly, rates differentials should continue to support the dollar.
Global divergences reinforce the safe role of Haven de Dollar
Beyond the monetary policy of the United States, the green back benefits from weakness abroad. In Europe, growth remains anemic, with Germany to the edge of stagnation and France facing fiscal instability. Meanwhile, China's recovery continues to disappoint despite the stimulus rounds, dragging global demand and feeling. In this environment, the dollar once again is affirmed as the default liquidity and security store.
Performance differentials remain supportive
The spread among us and has expanded modestly in the last two months, standing about 210 basic points. With the real yields of the United States firmly positive and above most developed peers, the dollar maintains an income advantage for global investors. Unless the ECB is surprised with Halcio or the Fed accelerated cuts, this performance gap should provide continuous winds of glue for green back.
The technical structure suggests a breakdown potential
From a technical point of view, the DXY index is consolidated within a bullish flag formation. The price moves just below the level of key of the key 104.20. A higher decisive movement would open the door to a 105.50 region test, a critical resistance for the last time in early May. Impulse indicators such as RSI and Macd are curving up, confirming the possible change in feeling.
CFTC positioning shows running space
Recent CFTC data reveal that long net speculative positions in the dollar have decreased from the main maximum of 2025. With the construction of bearish feelings, any rising surprise in inflation, job data or Fed tone could trigger a repositioning rally. In other words, the current positioning leaves the vulnerable dollar, not more inconvenient, but to a higher tight.
Conclusion: The dollar is still in the game
While the recent price action has fed the conversation of a structural decrease in dollars, that view seems premature. It is possible that the Fed is not cutting as fast as markets expect. The global economy continues to favor the United States in relative terms. Rate differentials, technical patterns and positioning support an upward dollar case. With the inflation impressions and Jackson Hole's speech from the Fed around the corner, the merchants would be wise not to bet too aggressively against the backback.
