HSBC says watch Trump trade policy, not Powell monetary policy, for direction of the USD

Via a note from HSBC, a few snippets to consider:

• The trajectory of U.S. trade policy is likely to have a greater impact on the U.S. dollar than monetary policy.
• The Federal Reserve’s March meeting had a neutral outcome, leaving the prevailing bearish sentiment on the dollar intact, especially as U.S. bond yields declined.
• However, the meeting did not trigger a significant and sustained selloff in the dollar either.
• The Fed’s continued cautious approach suggests a more measured outlook on interest rates in the short term.
• HSBC has kept its year-end 2025 forecast for the 10-year U.S. Treasury yield unchanged at 3.50%.
• There is potential for further declines in U.S. equities.
• But, some of HSBC’s market sentiment indicators signaling oversold conditions.

This article was written by Eamonn Sheridan at www.forexlive.com.