The US dollar recorded some significant increases during trading on Tuesday, coinciding with the release of some positive economic data that boosted demand for the US currency, particularly the consumer confidence data, which exceeded market expectations. Here’s a look at the key developments that impacted dollar trading:
Strength of Consumer Confidence Data Supports Dollar Rise The US dollar clearly benefited from the release of some positive economic data, notably the consumer confidence data, which came in better than market expectations, stirring optimism about the US economy.
The data showed that the US Consumer Confidence Index reached 98.0 points in May, higher than expectations of around 87.1 points. The previous reading for April recorded about 86.0 points but was revised down to 85.7 points during the same period. This data played a significant role in bolstering the strength of the dollar.
Dollar Benefits Amid Easing Trade Tensions Additionally, the US dollar received some support due to the easing of trade tensions between the United States and the European Union, particularly following a tweet from US President Donald Trump on Truth Social, in which he praised the positive communication between the two parties.
US President Donald Trump stated on Tuesday that he is monitoring the "positive" steps in trade talks with the EU after agreeing to delay the imposition of a 50% tariff on EU goods until July 9, hoping to open trade channels for US goods as they have done with China.
Drop in US Bond Yields Limits Dollar Rise On the other hand, the US dollar faced some pressure due to a drop in government bond yields, with the yield on 10-year bonds declining to 4.442%, and 20-year bonds to 5.4961%, while the yield on 30-year bonds dropped to 4.949%. This decline in yields negatively impacted the strength of the dollar.
How Did the Dollar Index Respond to These Developments? In light of these developments, the Dollar Index saw an increase of 0.62%, stabilizing near levels of 99.55 points, and is awaiting the release of economic data during the current week which could have a strong impact on its future trading.
