DXY Falls Amid Fears Over Trump’s Tax Cuts and Rising U.S. Debt

Market Overview

Australian

The U.S. dollar weakened broadly due to concerns over President Trump's spending and tax-cut package, pushing the 20-year bond yield up to 5.047%. International investors are shunning U.S. assets amid Moody's recent credit rating downgrade and projections that the budget package could add $3–5 trillion to national debt. This has triggered a "Sell America" effect, driving gold and Bitcoin sharply higher, 
while AUD/USD benefits from the greenback's depreciation.

As for the Australian dollar, market sentiment remains favorable due to capital outflows from the USD and stable domestic data. However, global inflation and potential volatility from G7 meetings could pose risks if trade tensions or geopolitical conflicts escalate.

Cryptocurrency

Bitcoin has reached a new all-time high, surpassing $110,000, fueled by strong institutional inflows from firms like Strategy, Metaplanet, and Twenty One Capital. This rally isn't driven by retail FOMO but is instead supported by corporate treasury accumulation strategies, ETF inflows, and favorable policy signals. Some analysts are still holding a 2025 price target of $210,000.

On-chain data shows unrealized profits remain high, yet there are no signs of widespread sell-offs. While short-term corrections are a concern, the market structure remains stable with low distribution pressure. Altcoins like XRP continue to face headwinds due to rising Bitcoin dominance.

Dollar index (DXY) 

Fundamental Analysis

The DXY index continues to weaken, falling to a near two-week low amid growing concerns over President Trump’s spending and tax-cut package, which is expected to increase public debt by $3–5 trillion. A weak 20-year bond auction with a record-high yield of 5.047% has reinforced the “Sell America” sentiment, prompting investors to exit USD-denominated assets.

Meanwhile, safe-haven assets like gold, the Japanese yen, and the euro have surged. The lack of defensive flows into the U.S. dollar signals a loss of market confidence in its traditional role as a safe haven amid  ongoing fiscal uncertainty in the U.S.

Technical Analysis

The DXY index is in a clear downtrend. Price has broken below the key support level at 100.20 and is now trading around 99.51. A pattern of lower highs and lower lows has formed, reinforcing the bearish trend.

The RSI is currently at 31.59, approaching the oversold territory. This indicates selling pressure remains dominant, though a short-term technical rebound may occur if RSI dips below the 30 threshold.

USOIL (WTI)

Fundamental Analysis

WTI crude prices have dropped to near $61 per barrel amid renewed oversupply concerns, following a surprise increase of 1.328 million barrels in U.S. crude inventories reported by the EIA last week—contrary to expectations of a decline. Gasoline and distillate stocks also rose, raising doubts about domestic demand in the U.S. A broader financial market sell-off driven by fears over U.S. public debt further added to the downward pressure on oil.

Additionally, investors are closely watching the upcoming U.S.–Iran nuclear talks. These developments have temporarily eased fears of potential supply disruptions from the Middle East after recent reports suggested Israel might strike Iran’s nuclear facilities.

Technical Analysis

USOIL is facing repeated rejections at the strong supply zone ($62.70–$64.80) and has turned lower toward the support area near $59.77. The current price structure leans toward a corrective downtrend, especially after being rejected at the 200 EMA.

The RSI is currently at 44.59—not yet in oversold territory—but forming lower highs, indicating weakening buying momentum. The downward RSI trend supports the potential for further declines.

Volume spiked sharply as price was rejected at the supply zone, signaling active selling pressure. Subsequent sessions have shown declining volume, suggesting buyers have yet to return with strength.

Gold Spot(XAUUSD)

Fundamental Analysis

Gold prices continue to rise, approaching $3,340/oz — the highest level in two weeks — driven by increasing safe-haven demand amid concerns over U.S. fiscal stability and a weakening dollar. CBA forecasts gold could reach $3,750 by Q4, as risks persist from soaring U.S. debt ($36 trillion), high bond yields, and potential conflict with Iran.

Moody’s recently downgraded the U.S. credit rating, while markets are growing wary of the impact from President Trump’s multi-trillion-dollar tax cut proposal. Additionally, China has ramped up gold imports, reflecting rising physical demand amid escalating trade tensions.

Technical Analysis

Gold is in a clear uptrend, confirmed by a rising structure of higher highs and higher lows. The price has broken above the key resistance level at $3,311 and is now targeting the upper supply zone and price gap above. This bullish move is supported by strong EMA alignment and volume activity.

The RSI is currently at 70.36, entering the overbought zone. While this reflects strong bullish momentum, a potential 
technical pullback should be watched for if RSI fails to hold higher levels.Trading volume surged during the breakout phase from the $3,212–$3,250 range, confirming aggressive buying interest. Volume remains elevated, which continues to support the upward move.

 

 

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