US Dollar gears up for French elections risk over the weekend


  • The US Dollar has Trump and Suzuki to thank for its early recovery on Friday. 
  • PCE fully falls in line of expectations.
  • The US Dollar index hovers around 106.00, back to Wednesday’s levels. 

The US Dollar (USD) is having difficulties in pricing in all events and elements that are moving in the markets. Traders are still digesting the Trump-Biden debate where nearly everyone saw former US President Donald Trump as the victor.While intervention risk from the Japanese government hangs over the US Dollar, French voters will go to the polls on Sunday. Recent results show the Far Right leading by 36.2%, followed by the Far Left with 28.3% and President Emmanual Macron's party lagging by 20.4%.

On the US economic calendar front, Personal Consumption Expenditures (PCE) came in fully in line of expecations. The disinflationary trajectory is in tact and is not facing any hiccups for now. Traders will now be on the lookout for the University of Michigan, ahead of the first round in the French elections over the weekend. 

Daily digest market movers: France heading to first round of elections

  • One Sunday night markets will know who will be heading to the second and final round of the French political elections on the week therefter. For now the Far Right movement is in the lead, followed by the Far Left and the party from current rulling President Emmanuel Macron.  
  • At 12:30 GMT, The Personal Consumption Expenditures for May was released:
    • Core Monthly PCE went from 0.2% to 0.1%.
    • Headline Monthly PCE headed from 0.3% to 0.0%.
    • Yearly Headline PCE faded a touch from 2.7% to 2.6%.
    • Yearly Core PCE eased from 2.8% to 2.6%.
  • The Chicago Purchase Managers Index (PMI) was an upbeat surprise, though remains in contraction from 35.4 to 47.4.
  • At 14:00 GMT, the University of Michigan will release its final reading for June:
    • Consumer Sentiment jumped to 68.2, coming from 65.6.
    • Inflation expectations eased a touch to 3%, from 2.1%.
  • Equities are trying to close this week off on a high note, with already several green closures in Asia, while European and US equities are in the green. 
  • The CME Fedwatch Tool is broadly backing a rate cut in September despite recent comments from Federal Reserve (Fed) officials. The odds now stand at 57.9% for a 25-basis-point cut. A rate pause stands at a 35.9% chance, while a 50-basis-point rate cut has a slim 6.2% possibility. 
  • The US 10-year benchmark rate trades near the weekly high at 4.28%.

US Dollar Index Technical Analysis: Several risks ahead

The US Dollar Index (DXY) may go where it wants to go in the coming days, though a sword of Damocles is hanging above its performance. The Japanese Ministry of Finance has repeated its state of emergency on the exchange rate and might intervene at any given moment as of now. That means a substantial move could unfold, which would knock out the Greenback for a moment. 

On the upside, the biggest challenge remains 106.52, the year-to-date high from April 16. A rally to 107.35, a level not seen since October 2023, would need to be driven by a surprise uptick in US inflation or a further hawkish shift from the Fed. 

On the downside, 105.53 is the first support ahead of a trifecta of Simple Moving Averages (SMA). First is the 55-day SMA at 105.27, safeguarding the 105.00 round figure. A touch lower, near 104.72 and 104.46, both the 100-day and the 200-day SMA form a double layer of protection to support any declines. Should this area be broken, look for 104.00 to salvage the situation. 

US Dollar Index: Daily Chart

US Dollar Index: Daily Chart

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD keeps range near 0.6350, Fed Minutes eyed

AUD/USD keeps range near 0.6350, Fed Minutes eyed

AUD/USD trades in a range around mid-0.6300s early Wednesday. The cautious market mood, the RBNZ dovish rate cut and Trump's tariff threat-led US Dollar upside remain a drag on the Aussie. Focus shifts to the Fed Minutes amid trade war fears. 

AUD/USD News
USD/JPY stays pressured below 152.00 amid cautious markets

USD/JPY stays pressured below 152.00 amid cautious markets

USD/JPY keeps its offered tone intact below 152.00 in late Asian trading on Wednesday. US President Trump's latest tariff threat and BoJ rate hike expectations underpin the Japanese Yen amid a pause in the US Dollar rebound. Traders await the Fed Minutes for fresh trading incentives. 

USD/JPY News
Gold price bides time before the next push higher

Gold price bides time before the next push higher

Gold price is looking to refresh record highs while holding the recent upside early Wednesday as attention turns toward the Minutes of the US Federal Reserve (Fed) January policy meeting and US President Donald Trump’s tariff plans.

Gold News
Bitcoin stretches losses as CME premiums dip, Strategy aims to purchase $2 billion worth of BTC

Bitcoin stretches losses as CME premiums dip, Strategy aims to purchase $2 billion worth of BTC

Bitcoin continued its downward trend on Tuesday as K33 Research's weekly report indicated growing declines in BTC CME premium and yields. Meanwhile, Strategy announced plans to issue $2 billion worth of senior convertible notes.

Read more
Rates down under

Rates down under

Today all Australian eyes were on the Reserve Bank of Australia, and rates were cut as expected. RBA Michele Bullock said higher interest rates had been working as expected, slowing economic activity and curbing inflation, but warned that Tuesday’s first rate cut since 2020 was not the start of a series of reductions.

Read more
The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025