empty
20.05.2025 09:42 AM
Financial Markets Still Gripped by Uncertainty (Potential Decline in #USDX and Gold Prices)

Despite the 90-day truce between Beijing and Washington, market conditions remain extremely tense. Investors are uncertain about what will happen after three months—whether Donald Trump will hike tariffs again or devise something even more convoluted.

Everyone who thinks critically understands that the current state of neither war nor peace in U.S.-China trade relations stems from America's economic vulnerability and China's industrial strength. Because Chinese goods have infiltrated virtually every American household, the current U.S. administration is forced to maneuver, deceive, and twist reality in an attempt to break the resistance of its main economic rival. Directly, the U.S. cannot overpower China with threats or blackmail. Naturally, this overarching uncertainty fuels the market's high volatility.

Even gold prices, which had been rising steadily since the beginning of the year, have entered a chaotic pattern of unpredictable swings. This again reflects investor confusion over how Trump's chaotic policy actions will unfold. Buying gold at historically high levels without a clear rationale is extremely risky, even under the guise of hedging.

A year ago, the U.S. dollar would have found strong support as a safe-haven asset during episodes of risk aversion. But that's no longer happening. Investors fear a ballooning U.S. budget deficit, concerns that escalated after the Budget Committee approved Trump's tax-and-spending legislation on Sunday. The proposed plan is projected to increase the deficit by trillions of dollars over the next decade. The president claims that tax cuts will stimulate growth, boost revenues, and eventually reduce the deficit. But in reality, the U.S. is caught in a vicious cycle that may be impossible to escape without major shocks. Economic stimulus requires public spending, which also increases national debt—something Trump once vowed to reduce. It seems inevitable that he will fall back on the same old habit of living on borrowed money, potentially leading to a collapse of the U.S. financial system.

Meanwhile, on Monday, Atlanta Federal Reserve President Raphael Bostic reiterated his expectation of only one rate cut this year, citing uncertainty caused by tariffs. This, combined with President Trump's actions, has weakened the dollar on the foreign exchange market. On this backdrop, cryptocurrencies are also under pressure and consolidating within sideways ranges. The only rising assets are stock indices, supported by relatively strong corporate earnings and the 90-day trade truce. The hope that the economic strain will force the Fed to resume rate cuts remains the key bullish driver.

What to Expect in Today's Markets:

We can likely expect overall sideways movement amid high volatility. The U.S. dollar index (USDX) may decline further as fiscal deficit concerns rise and expectations for Fed rate cuts grow. Gold prices may again retreat toward recent local highs. Stock markets will likely attempt a mild upward movement.

This image is no longer relevant

This image is no longer relevant

Forecast of the Day:

#USDX

The dollar index is hovering near the 100.10 mark. A break below could push it down to 99.30. A good level to consider short positions is 99.99.

Gold

Gold prices are also under pressure due to broad market negativity. A drop below 3210.00 could open the way toward 3128.50. A potential sell entry could be considered around 3201.48.

Pati Gani,
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

What to Pay Attention to on June 16? A Breakdown of Fundamental Events for Beginners

No macroeconomic reports are scheduled for Monday, but the market does not lack news. This week, Donald Trump announced his intention to raise all import tariffs, as none

Paolo Greco 06:46 2025-06-16 UTC+2

GBP/USD Overview – June 16: How Trump Is Undermining the Dollar

The GBP/USD currency pair will remain under the influence of geopolitics and politics in the new week. Essentially, we've been saying the same thing every day for the past four

Paolo Greco 04:54 2025-06-16 UTC+2

EUR/USD Overview – June 16: The Israel-Iran Conflict Changes Nothing

The EUR/USD currency pair moved sharply back and forth throughout Friday. The pair traded with high volatility for two consecutive days, and there is a clear and logical explanation

Paolo Greco 04:54 2025-06-16 UTC+2

EUR/USD. Weekly Preview. Focus on the Middle East and the Federal Reserve

The final trading day of last week ended on an uncertain note. Reacting to Middle East developments, the EUR/USD pair sharply declined on Friday, retreating from the multi-year price high

Irina Manzenko 01:30 2025-06-16 UTC+2

Bitcoin Gripped by Fear

Charity begins at home. As it turns out, the 47th President of the United States' loyalty to the crypto industry is rooted in personal interests. Donald Trump and his family

Marek Petkovich 01:29 2025-06-16 UTC+2

US Dollar: Weekly Preview

Once again, the dollar will be in the spotlight this week, not only because of the Federal Reserve meeting but also due to political developments in the United States

Chin Zhao 00:38 2025-06-16 UTC+2

British Pound: Weekly Preview

The UK will have at least one report that deserves attention. On Wednesday, the May inflation report will be released. According to market expectations, inflation will slow to 3.4% year-over-year

Chin Zhao 00:38 2025-06-16 UTC+2

Euro Currency: Weekly Preview

The European currency continues to benefit from the weakness of the U.S. dollar, which became fully apparent after Donald Trump returned to the scene. Honestly, discussing how Trump—or the events

Chin Zhao 00:38 2025-06-16 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair is showing a modest recovery from levels below 1.3600, retracing most of the previous day's losses, supported by a rebound in the U.S. dollar. In addition, concerns

Irina Yanina 13:09 2025-06-13 UTC+2

AUD/JPY. Analysis and Forecast

The AUD/JPY pair has been under selling pressure for the third consecutive day, reaching an almost two-week low around 92.30 during Friday's Asian session. After a sharp drop, spot prices

Irina Yanina 12:53 2025-06-13 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.