US Treasury secretary Steven Mnuchin commented about the US Dollar price yesterday. He said that "naturally, a weak Dollar is good for us because it creates trade and opportunities." Thus, Mnuchin was signed up on the pages of history as the first secretary of the treasury from the early 90s who does not agitate for a strong currency. For some time, the market has been revolving around the issue of increased protectionism by the administration of President Trump and the revival of trade wars, and yesterday he received the proof that he would give up the dollar without hesitation. And Mnuchin himself is wrong. A weak Dollar can and will help domestic exporters to compete on foreign markets, but the US imports more than they export, so the Dollar's depreciation will blow up their trade deficit. The government's betting on the weakness of the currency undermines confidence in the Dollar as a reserve currency and scares off foreign capital willing to invest in the US. Of course, President Trump may think that the US economy itself is creating everything and does not need "bad" imports, which takes away the work of honest Americans. Whether the strategy will lead to the anticipated results, we will see in the near future.
Let's now take a look at the US Dollar index technical picture at the H4 time frame. The index has made another leg down to the level of 88.81 in deeply oversold market conditions. The key technical resistance is now at the level of 89.62 and only a sustained breakout above this level can be the first clue of incoming pull-back.
