US Dollar Pares Losses, DXY Holding Near Thee-Year Lows

By Staff of FX Street

Friday, April 11, 2025 9:40 AM EDT

Fears of a US recession amid a trade war with China hit the USD hard.
Beijing announced on Friday retaliatory levies of 125% on US imports.
The US Dollar Index fell to a three-year low of 99.02, bearish bias intact.

The US Dollar Index (DXY) bounced from a fresh three-year low of 99.02 achieved on Friday amid escalating tensions between China and the United States (US). The index currently hovers around 99.70, sharply down for a second consecutive day.

The DXY, a measure of the US Dollar (USD) against a basket of major currencies, fell in European morning trade on the back of headlines indicating China would retaliate against the latest White House levies announcement. On Thursday, the US confirmed tariffs on China at 145%, the 20% initially imposed, plus the 125% recently announced.

As a result, the Chinese Finance Ministry announced on Friday that the country will raise additional tariffs on US imports from 84% to 125%, starting April 12. The market sentiment plunged afterwards and pushed the DXY towards the aforementioned low.

Additionally, China's Commerce Ministry urged the US to take a big step forward in eliminating the so-called "reciprocal tariffs" and completely correct its wrong practices.

The sentiment soured on the news that revived speculation of a US recession being around the corner.

US Dollar Index Technical Outlook

(Click on image to enlarge)

The DXY remains under strong pressure, and technical readings in the daily chart suggest the slide is far from over. The index develops well below all its moving averages, with the 20 Simple Moving Average (SMA) gaining downward traction below the 100 and 200 SMAs, usually a sign of prevalent selling pressure.

At the same time, technical indicators retain their sharp bearish momentum within negative levels, while standing far from oversold readings.

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