USD: April ISM poses the downside risk – ING

Whether it has been the approach of public holidays or some real improvement in the global geopolitical environment, cross-market measures of financial volatility continue to fall. US equities have now nearly retraced 90% of their drop in the aftermath of 'Liberation Day', with Meta and MSFT delivering decent 1Q results overnight. Amazon and Apple report today. Helping some of the recent improvement in mood has been news from the Chinese state broadcaster that the US has reached out for trade talks. And a report late yesterday that EU trade negotiators have offerings to bring to the table next week has also helped, ING's FX analyst Chris Turner notes.

100.25/100.50 caт prove good intra-day resistance for DXY

"Also welcome news for markets is the US and Ukraine signing a minerals deal in which the US recognises Ukraine's sovereignty and seems to be delivering, albeit in an implicit way, security guarantees. The slightly more positive environment has seen some more of the risk premium come out of the dollar. The reduction in dollar risk premium may have a little further to go, but may run into the bearish headwind of US data."

"The front-loading of imports largely triggered yesterday's weak 1Q25 US GDP data - and that's why the dollar did not sell off. Today, however, we're all expecting a soft April ISM manufacturing release ahead of the main event, which is tomorrow's jobs report. Consensus is already quite low at 47.9 for the headline ISM number. And anything softer than that could trigger another leg lower in the dollar."

"100.25/100.50 should prove good intra-day resistance for DXY. Anything above there, and investors may need a rethink of some ultra-bearish dollar strategies, and 102 could be the surprise package."