The USDX experienced significant volatility throughout April, reflecting a challenging macroeconomic and policy environment. The month began with the USDX under sustained pressure, encountering resistance after breaching the midpoint of the daily Bollinger Bands and reaching the high from the final day of March trading. The ISM Manufacturing PMI released on April 1st recorded a contraction at 49.0, slightly below the expected 49.5 and down from 50.3 in the prior month, confirming weaker-than-expected data highlighted ongoing challenges in the manufacturing sector. On April 2nd, ADP employment surpassed expectations, with 155,000 private sector jobs created against the 105,000 anticipated, and an increase in February's upwardly revised figures. However, despite this, renewed tariff concerns undermined sentiment after the U.S. Liberation Day Tariff Announcement. As a result, the USDX broke below a previously held support area to close the day with a loss of 0.52%. On April 3rd, ISM Services PMI fell to 50.8 against 53 expected, signaling the slowest pace of expansion in the sector since June 2024. The release and ongoing concerns about new tariff announcements weighed on market sentiment, and the USDX closed the day at 102.69, extending its losses by 1.18%. Despite a late-week rally on April 4th spurred by a robust March Nonfarm Payrolls report, as jobs rose by 228,000, well above the 135,000 consensus and February’s downwardly revised 102,000, it was not enough to offset earlier losses. The day closed at 102.69, with a 0.93% gain, and ended the week with a loss of 1.03%.

The following week, the bearish sentiment persisted after Monday’s initial rally, when the USDX met with resistance at the daily 10 EMA to close with a gain of 0.45%. The U.S. Dollar Index ® retested the 10 EMA on April 8th to close lower with a loss of 0.41%, significantly eroding the prior day's gains. On April 9th, the Federal Reserve released minutes from its March meeting with no surprises, highlighting a cautious stance as policymakers held rates steady at 4.25% - 4.50%. The minutes revealed concerns about persistent inflation, especially with new tariffs expected to push prices higher, while also noting growing risks to economic growth and employment. The Fed signaled a more measured approach going forward amid heightened uncertainty. The USDX experienced some volatility, influenced by the Fed's announcement, retested the 10 EMA after the release, and pulled back. President Trump also announced a 90-day pause on tariffs for many trading partners, while raising tariffs on Chinese imports to 145%, which influenced the day’s trading. The USDX ultimately closed with a gain of 0.16%. On April 10th, Annual Core Inflation, excluding food and energy, eased to 2.8% for the 12 months ending March. The Consumer Price Index (CPI) for the same period also softened, slowing to 2.4% from 2.8% in February. These softer inflation readings combined with the fallout from the increase in tariffs on Chinese imports led to the USDX closing at 100.74, with a loss of 1.91%, the weakest daily performance of the month. After mixed data releases, the bearish sentiment continued into April 11th, the week's final trading day. The Producer Price Index (PPI) data (excluding food and energy) came in at 3.3% year-on-year, slightly below the expected 3.6% and the prior month's release of 3.5% (upwardly revised). The Michigan Consumer Sentiment Index data fell to 50.8 (revised to 52.2), the lowest level since July 2022, influencing the bearish sentiment as money moved from the U.S. Dollar into other assets such as Gold, Swiss Franc, and the Yen. The U.S. Dollar Index ® closed the day at 99.60, down 0.71%, breaking through a support zone at 100.67 - 99.86, the first daily close below the 100.00 mark since July 2023, closing the week with a loss of 3.07%.

The bearish momentum continued into the week of April 14th, although there was support in the region of 98.76 - 98.34, which, while not tested in the week, led the USDX to trade sideways, with the lows almost testing the area. On April 14th, the USDX closed down 0.31%, rebounding on April 15th to close with a gain of 0.33%. On April 16th, there was positive news following the release of Retail Sales figures. Headline retail sales rose 1.4%, beating forecasts of 1.3%, downwardly revised to 0% the prior month. However, the USDX closed lower, following the Fed Chair Jerome Powell's speech warning about the risks posed by President Trump’s tariffs, and that they could push inflation higher while slowing economic growth and weakening the labor market. The USDX reacted sharply, closing the day down 0.80%. The week's final trading day saw the USDX recover slightly, a gain of 0.13%. Despite the late pullback, the U.S. Dollar Index ® closed the week with a loss of 0.57% at 99.18.

On Monday, April 21st, the demand for the U.S. Dollar weakened, and the USDX closed with a loss of 0.91%, closing below the support area the index had hovered above the prior week to dip into a weekly support area with a range of 97.74 - 95.66, which was nested within a monthly area. On April 22nd, the U.S. Dollar Index ® rebounded to close the day with a gain of 0.62% at 98.75. On April 23rd, the U.S. Dollar strengthened as President Trump publicly backed Fed Chair Powell, easing worries about political interference in monetary policy. Hopes for a possible easing in US-China trade tensions further lifted market confidence, even as tariffs and countermeasures remained a key risk. This optimism drove the demand for the U.S. Dollar, which was also helped by an unexpected rise in April’s S&P Global Manufacturing PMI to a preliminary 50.7 from 50.2, signaling modest growth in factory activity. However, the services sector showed less resilience, with the S&P Global Services PMI slipping to 51.4 from 54.4 in the prior month. On April 24th, the demand for the U.S. Dollar weakened, after almost reaching the 10 EMA, to close down 0.54% at 99.07. The sentiment reversed on April 25th, and the USDX rose to test the 10 EMA before pulling back slightly to close at 99.37 with a gain of 0.14%. The final few trading days saw the USDX retest the daily 10 EMA, which acted as resistance. On April 30th, the preliminary Q1 2025 GDP figures surprised markets by showing a 0.3% annualized contraction, the first decline since 2022. This initially weighed on the USDX, but later in the day, President Trump’s remarks highlighting major business investments and job growth in the U.S. helped restore confidence. As a result, the U.S. Dollar Index ® recovered and closed the day with a gain of 0.47%.

The U.S. Dollar Index ® closed the month down 4.27%, marking its largest monthly loss since November 2022. Adding this decline to the prior months, this has been the worst start to the year since 2008.

During April, the U.S. Dollar Index ® remained in a downtrend on the weekly chart, consistently trading below the 20, 30, and 50-period SMAs and EMAs. The downtrend was mirrored on the daily timeframe, where the USDX also traded under its 20, 30, and 50 EMAs and SMAs, reinforcing the prevailing downward momentum.

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