U.S. Dollar Index trapped in 103.6-104 range as Trump tariff announcement looms

The U.S. Dollar Index price has been struggling to find direction recently, caught in a tight consolidation range between 103.6 and 104.0. On April 1st, the dollar faced resistance, showing limited movement and fluctuating within this narrow range. The situation remained unchanged during the Asian and European sessions on April 2nd as the U.S. Dollar Index hovered around 103.85, still within the consolidation zone.
The dollar’s weakness can be attributed to disappointing economic data released earlier this week. Tuesday's JOLTS Job Openings and ISM Manufacturing PMI data fell short of expectations, providing little support for the U.S. dollar. As the data failed to impress markets, the dollar struggled to gain upward momentum, remaining within the established range.
The spotlight now shifts to U.S. President Donald Trump's tariff announcements, scheduled for "Liberation Day" at 20:00 GMT. These announcements could serve as a catalyst for market volatility, particularly for the U.S. dollar, as investors anticipate the potential impact on global trade relations. Additionally, market participants are paying close attention to the upcoming March ADP Employment Change and February Factory Orders data, as well as comments from central bankers.
DXY 4-hour chart shows 103.9 as critical resistance, while RSI signals indecision
U.S. dollar price dynamics (March - April 2025). Source: Tradingview
Looking at the 4-hour chart, the U.S. dollar Index faces resistance at the 100 EMA around 103.9. This level has acted as a ceiling for the dollar’s price action, keeping it subdued for now. The RSI is hovering just above the neutral level, suggesting that the market remains in a state of indecision.
Given the upcoming economic and political events, the key focus for traders now is whether the dollar will break out of this consolidation range. A breakout above 104.0 could signal renewed strength for the dollar, while a breakdown below 103.6 could lead to further losses. Traders will be watching closely for any signals as today’s events add to the overall uncertainty.
The U.S. Dollar Index (DXY) declined 3.7% in Q1 2025, settling at a five-month support level in mid-March. The 4-hour RSI for DXY dipped into oversold territory, signaling short-term reversal.