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US Dollar Seesaws After Federal Court Blocks Trump’s Tariffs
There has been some violent moves around markets since yesterday's North-American session close.
Between the misstep in Nvidia’s earnings release and renewed political tensions in the U.S, markets had plenty of fuel for volatility across the board.
The USD gapped up on the news that the US Federal Court blocked the Trump's sweeping tariff policy - though volatility induces more volatility and the dollar is now the weakest currency on the day.
Trying to make sense of these moves - USD Chart
DXY 1H Chart, May 29, 2025. Source: TradingView
The Dollar has had some wild swings to pursue the year’s theme. The US Federal Court decision greatly appreciated the USD, supplemented with a beat in Nvidia Earnings.
US Index Futures rallied massively, and other major currencies initially took a beating. A broader theme of lack of confidence in the US led to some profit (or loss) booking of positions and the market selling this news.
As observed on the charts, the markets rejected last week's highs situated around the 100.50 level and quickly retested the 100.00 key level.
A market that has been downtrending may retest prices as a trend reverses, and this would have been a healthy gap close if the market did not reverse much further.
The DXY opened up 0.66% and is now down -0.44%.
The rejection got exacerbated by US Weekly Jobless Claims that came in weaker than expected (240K actual vs 230K exp) and other currencies are now enjoying from a break off USD Strength, with the Euro leading the charge.
Next support is at 99.20 to 99.30, about 100 pips away.
A return towards the MA 200 would eye at 99.70 and further reversal of the move down would hint at another retest of the 100.00 level.
DXY is trading around 99.45 right now and markets showed a indecision doji at the last hour.
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Gold Got Another Strong Bid on a Dip
Gold has been on a downward trend since the end of last week, with the sell-off peaking in the first few minutes after reports that a trade court ruled that most of Trump’s tariffs were illegal. Having fuelled risk appetite, this news triggered a sell-off in the ‘defensive asset’. The positive traction ended rather quickly as the US President’s administration appealed.
Gold managed to stay within this year’s pattern and was actively bought on an intraday dip below $3250, once again pushing the price away from the 50-day moving average. The dynamics are impressive as the price is adding about 2% to the intraday lows, reaching $3310 per ounce. In April and earlier in May, the price had already bounced off this curve, forming a sequence of higher local lows.
On the other hand, gold also has three successive lower peaks from the all-time highs in April, forming a line of downward resistance. This line is already being tested, and confirmation of its break will be a consolidation above the previous highs at $3365. It promises to be a prelude to a rise above the established historical highs at $3500.
US: A Surge in Imports Leaves a Big Mark on Q1 GDP
The second release of first quarter real GDP growth was left broadly unchanged, showing a very modest contraction of 0.2% quarter-over-quarter annualized (previously -0.3%) – a tenth below the consensus forecast. Recall, this is a notable deceleration from the 2.9% annualized rate of expansion averaged over the prior two quarters and is the first quarterly contraction in three-years.
- The slight upward revision to GDP reflected stronger investment which was partially offset by a downgrade to consumer spending.
Consumer spending rose 1.2% (previously 1.8%), or roughly a third of the rate of expansion in the prior quarter. The downgrade was largely due to softer services spending (2.2% from 2.7%).
Non-residential fixed investment rose 10.4% (previously 9.8%), with a surge in equipment spending (24.7%) accounting for the bulk of the gain – reflecting companies ramping up purchases ahead of the tariffs. Investment in intellectual property products (+4.6%) was also healthy, rising at the fastest annualized pace in a year.
Residential investment was revised to a small contraction of 0.6% (previously +1.3%).
The bulk of the pullback in GDP came from net exports. Imports surged by 42.6%, largely owing to a strong gain in goods imports (53.3%). Meanwhile, exports rose by a more modest 2.4%, resulting in net trade subtracting 4.9 percentage points (pp) from headline growth. Roughly half of the uptick in imports showed up in inventory investment, which added 2.6pp to Q1 GDP.
Government spending contracted by 0.7%, as outlays from both federal defense (-7.1%) and non-defense (-1.2%) declined.
Final sales to private domestic purchasers – the best gauge of underlying domestic activity – expanded by a healthy 2.5%.
Real Gross Domestic Income (GDI) also contracted by 0.2% in the first quarter. Corporate profits fell 11.3% annualized or $118 billion after accounting for inventory valuation and capital consumption adjustments. However, this was partially offset by another solid gain in employee compensation (5.4%), which accounts for roughly two-thirds of total national income.
Key Implications
The second estimate of first quarter real GDP did not change the underlying narrative. Economic growth was heavily weighed down by a surge in import activity, as businesses scrambled to pull forward purchases ahead of the tariffs. Looking through the import shock, underlying domestic demand remained reasonably healthy, but this too likely captures behavior shifts related to tariffs in investment and consumer purchases, such as autos.
As of May 28th, the U.S. Court of International Trade struck down all of President Trump's tariffs related to the International Emergency Economic Powers Act, including the Canada/Mexico/China fentanyl tariffs, the universal 10% tariffs currently in effect and the delayed reciprocal tariffs that were slated to come back into effect as of July 9th. The court ruling has no impact on sectoral tariffs, including the steel & aluminum and auto related tariffs. While the administration has already said that they plan to appeal the ruling, timelines remain unclear. At the very least, yesterday's announcement weakens the U.S. position in trade talks that were underway with more than a dozen nations, most notably the EU and China.
Of the Q2 data released, there's only moderate evidence that domestic spending has slowed in response to heightened trade uncertainty. But the pullback in Q1 corporate profits – the largest quarterly decline since Q4'2020 – is a warning sign that firms were coming under pressure, and this was before the bulk of the tariffs had even come into effect. Tomorrow's release of the April personal income and spending will provide a more fulsome snapshot of how the consumer fared last month, and whether there's any evidence of a softening in discretionary spending trends.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.1268; (P) 1.1307; (R1) 1.1329; More...
Intraday bias in EUR/USD is turned neutral again with current recovery. On the upside, break of 1.1417 resistance will revive the case that correction from 1.1572 has completed at 1.1064. Retest of 1.1572 should then be seen next. Nevertheless, break of 1.1209 will extend the corrective pattern and target 1.1064 support and possibly below.
In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 55 W EMA (now at 1.0858) holds.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.8247; (P) 0.8269; (R1) 0.8293; More….
Intraday bias in USD/CHF is turned neutral first with current retreat. On the upside, above 0.8346 will target 0.8475 resistance. Firm break there will target 100% projection of 0.8038 to 0.8475 from 0.8187 at 0.8624. However, below 0.8187 will bring retest of 0.8038 low instead.
In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress and met 61.8% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.8079 already. In any case, outlook will stay bearish as long as 55 W EMA (now at 0.8713) holds. Sustained break of 0.8079 will target 100% projection at 0.7382.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 144.12; (P) 144.60; (R1) 145.35; More...
Intraday bias in USD/JPY is turned neutral with current retreat. On the upside above 146.27 will target 148.64 resistance first. Firm break there will resume the rebound from 139.87 to 100% projection of 139.87 to 148.64 from 142.10 at 150.87. Nevertheless, break of 142.10 will bring deeper fall back to 139.87 low.
In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3440; (P) 1.3481; (R1) 1.3512; More...
Intraday bias in GBP/USD remains neutral for the moment. With 1.3389 support intact, further rally is expected. On the upside, firm break of 1.3592 will resume larger rally for 100% projection of 1.2706 to 1.3442 from 1.3138 at 1.3874. However, decisive break of 1.3389 will confirm short term topping, and turn bias back to the downside for 1.3138 support instead.
In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2870) holds, even in case of deep pullback.
Dollar Reverses as Markets Doubt Lasting Impact of US Tariff Ruling
Dollar initially surged after the US Court of International Trade ruled against President Donald Trump’s sweeping reciprocal tariff orders. Market participants initially interpreted the ruling as a potential turning point in the US trade policy, fueling a rally in the greenback and risk assets.
However, the greenback's rally proved short-lived. As the US session opened, the greenback reversed course and turned broadly lower. Traders began to reassess the practical implications of the ruling, with many suspecting that the Trump administration could still find legal or procedural workarounds to reinstate the tariffs.
In that context, the ruling may have increased legal complexity but done little to reduce the overarching geopolitical uncertainty. Traders are clearly skeptical that the legal setback will lead to a meaningful shift in trade tensions.
Indeed, skepticism is evident across financial markets. DOW futures, which had gained more than 500 points earlier in the day, gave back almost all of those gains. NASDAQ remained resilient, supported by tech sector optimism, but broader risk appetite appeared to fade. Gold, meanwhile, rebounded above the 3300 level as safe-haven demand returned, signaling that markets are still hedging against unresolved geopolitical and policy risks.
In currency markets, the shift in sentiment was clear. Dollar is now the weakest performer of the day, followed by Sterling and then Yen. Aussie emerged as the top gainer, while Euro and Kiwi also firmed. Swiss Franc and Canadian dollar are trading in the middle of the pack.
Technically, intraday bias in Gold is turned neutral first with current recovery. On the upside, break of 3365.92 resistance will revive the case that correction from 3499.79 has completed with three waves down to 3120.34, and bring retest of 349.79 high. Nevertheless, below 3245.23 will extend the corrective pattern with another falling leg.
In Europe, at the time of writing, FTSE is flat. DAX is up 0.23%. CAC is up 0.63%. UK 10-year yield is down -0.006 at 4.726. GErmany 10-year yield is down -0.005 at 2.551. Earlier in Asia, Nikkei rose 1.88%. Hong Kong HSI rose 1.35%. China Shanghai SSE rose 0.70%. Singapore Strait times rose 0.13%. Japan 10-year JGB yield rose 0.003 to 1.520.
US initial jobless claims rise to 240k vs exp 230k
US initial jobless claims rose 14k to 240k in the week ending May 24, above expectation of 230k. Four-week moving average of initial claims fell -250k to 231k.
Continuing claims rose 26k to 1919k in the week ending May 17, highest since November 13, 2021. Four-week moving average of continuing claims rose 3k to 1890k, highest since November 27, 2021.
RBNZ’s Hawkesby: OCR in neutral zone, July cut not a done deal
RBNZ Governor Christian Hawkesby told Bloomberg TV today that another rate cut at the July meeting is “not a done deal” and “not something that’s programmed.”
With the OCR at 3.25% after this week's reduction, it's now sitting within the estimated neutral range of 2.5% to 3.5%. Hawkesby emphasized the central bank has entered a phase of “considered steps,” guided closely by incoming data rather than a preset easing path.
He acknowledged rising uncertainty, noting that near-term growth headwinds have intensified and both demand and inflation pressures are weaker than they were back in February. He also highlighted the uncertainty surrounding global trade policy, particularly tariff developments, which could play out in various ways.
NZ ANZ business confidence falls to 36.6, supporting case for further RBNZ easing
New Zealand’s ANZ Business Confidence index dropped sharply in May, falling from 49.3 to 36.6. Own Activity Outlook, a key indicator of firms’ expectations for their own performance, declined to 34.8 from 47.7.
Profit expectations also plunged to 11.1, indicating mounting pressure on margins. Although cost and wage expectations eased slightly, they remain elevated, while inflation expectations edged up from 2.65% to 2.71%.
According to ANZ, the survey paints a mixed picture: the economy is in recovery mode, but businesses continue to face tough operating conditions, particularly in passing on cost increases. The data reinforces the view that RBNZ can afford to support growth through further rate cuts, barring any major inflation or data surprises.
ANZ expects the OCR to eventually fall to 2.5%, as global headwinds and domestic fragilities persist.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3440; (P) 1.3481; (R1) 1.3512; More...
Intraday bias in GBP/USD remains neutral for the moment. With 1.3389 support intact, further rally is expected. On the upside, firm break of 1.3592 will resume larger rally for 100% projection of 1.2706 to 1.3442 from 1.3138 at 1.3874. However, decisive break of 1.3389 will confirm short term topping, and turn bias back to the downside for 1.3138 support instead.
In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.2870) holds, even in case of deep pullback.
US initial jobless claims rise to 240k vs exp 230k
US initial jobless claims rose 14k to 240k in the week ending May 24, above expectation of 230k. Four-week moving average of initial claims fell -250k to 231k.
Continuing claims rose 26k to 1919k in the week ending May 17, highest since November 13, 2021. Four-week moving average of continuing claims rose 3k to 1890k, highest since November 27, 2021.
