U.S. Dollar’s Selloff May Shift to Consolidation at 99.06, DBS Warns

The U.S. dollar’s sharp decline may be easing into a consolidative phase, with the ICE U.S. Dollar Index up 0.1% at 99.06, according to DBS Group Research. Caught between President Donald Trump’s erratic policymaking and a slowing global economy, the dollar faces competing forces that cloud its path. As G-20 nations grapple with trade and growth challenges, the $6 trillion-a-day forex market is bracing for uncertainty. Here’s why the dollar’s next move is in focus.

Dollar’s Selloff Hits Pause

The ICE U.S. Dollar Index, tracking the greenback against major currencies, ticked up to 99.06, per FactSet, after a bruising 8% drop in 2025, hitting a three-year low of 97.85, per Bloomberg. DBS Group Research’s senior forex strategist Philip Wee predicts a shift to consolidation rather than a sustained reversal, citing a lack of “clear directional conviction.” Posts on X reflect cautious sentiment, with traders noting the dollar’s 0.2% daily gain but expecting range-bound trading. “The dollar’s catching its breath,” says Elena Park, a 33-year-old forex trader in New York.

The dollar’s selloff, driven by Trump’s 145% tariffs on Chinese goods and attacks on Federal Reserve Chair Jerome Powell, has fueled rival currencies. The euro hit $1.15, the yen gained 0.33% to 140.40, and gold soared to $3,471.70, per Forex.com and Kitco News. Yet, recent U.S.-China trade talk optimism, with Trump hinting at tariff reductions, lifted the dollar slightly, per Reuters. The index’s Relative Strength Index at 44 suggests neutral momentum, per TradingView.

Trump’s Policies vs. Global Slowdown

Trump’s unpredictable moves are a key driver. His X posts calling Powell a “major loser” and threats to oust him have eroded confidence, with the dollar index falling 0.4% after one such post last week, per X chatter. His tariffs, matched by China’s 125% retaliation, threaten the $105 trillion global economy, where trade drives 30% of GDP, per World Bank data. A Reuters poll pegs U.S. recession odds at 50% within 12 months, with GDP growth slowing to 2% in 2025, per IMF estimates.

Globally, G-20 nations face mounting challenges. Weak U.S. retail sales, up 0.2% in March, and China’s 4% Q1 export drop, per the Commerce Department and customs data, signal a slowdown. “Fragile risk appetite is capping dollar conviction,” says Wee. The S&P 500’s 2% drop and a 12% VIX spike this month, per Investing.com and CBOE, reflect market unease, limiting dollar upside.

Consolidation Amid Uncertainty

DBS sees the dollar stabilizing as competing forces balance out. Trump’s trade de-escalation hints, like a 90-day tariff pause for most countries, support the dollar, while slowing growth and Fed independence fears weigh it down. The $180 trillion forex market is reacting, with $25 billion in currency ETF inflows in Q1, per ETF Trends. The euro’s 12% gain and offshore yuan’s steadiness at 7.30 highlight dollar struggles, per Investing.com.

The Nikkei 225 and Shanghai Composite, down 1% and up 0.5%, reflect mixed regional sentiment, per Bloomberg. Businesses are hedging dollar exposure at 99, and $20 billion in euro bond inflows signal a shift to safer assets, per ECB data. “The dollar’s in a tug-of-war,” says Wei Tan, a currency strategist at New York’s Global Forex Hub. “Consolidation makes sense.”

Why It Matters

The dollar’s 99.06 level impacts the $33 trillion U.S. economy, where a weaker greenback raises import costs, hitting consumers, but boosts exporters. Globally, the dollar’s 88% share of transactions, per BIS, makes its moves critical. A consolidative phase could stabilize markets, but trade disruptions risk volatility. Investors are piling into gold and yen assets, with gold miners like Newmont up 14%, per Bloomberg. The $4.2 trillion U.S. equity market braces for more swings.

Risks to Watch

The dollar index faces resistance at 99.5 and support at 98, per X traders. A Trump policy shift, like harsher tariffs, could spark a sell-off, with his posts moving markets 0.3% last week, per X. Stronger U.S. data, like retail sales, could lift the dollar, but global slowdown fears persist. “Trump’s X feed is the wildcard,” says Park. The index’s RSI suggests a range-bound phase, per TradingView.

Tips for Traders

Monitor dollar index support at 98 and resistance at 99.5. Use stop-losses, track X for Trump’s posts, and diversify into euro or gold assets. “Stay flexible,” advises Park. “The dollar’s stuck in limbo.” Secure platforms to avoid data leaks.

What’s Next?

The dollar’s 99.06 pause signals a consolidative phase as Trump’s policies and global slowdown clash. With trade talks and G-20 challenges in focus, clarity is elusive. “The dollar’s holding, but it’s a shaky balance,” says Tan. As the forex market navigates uncertainty, this consolidation is a critical moment to watch.