Earlier this month, on January 20, 2025, Donald Trump was officially inaugurated for his second term as President of the United States, a historic moment as he returns to office. In the months leading up to his inauguration, both global financial markets and cryptocurrency markets experienced significant volatility and strong price movements in anticipation of his leadership. As seen in the past, Trump’s unpredictable decision-making and spontaneous actions have fueled market excitement and uncertainty, contributing to heightened volatility.
In recent weeks, we’ve witnessed Trump take action on many of the promises made during his election campaign. Several executive orders have already been signed, and efforts to implement these policies are now underway. One notable executive order that has been signed off includes the “America First Trade Policy”. The policy details Trump’s plans to impose tariffs on various countries, raising concerns about potential trade wars in the near future. While some assume that Trump is simply threatening to implement these tariffs, there is a possibility that he could be using these threats as a strategic bargaining tool to achieve broader objectives. Now the question remains, what impact could this and other executive orders have on financial markets and in particular the Dollar Index and S&P 500 moving forward?
Let’s take a closer look into these factors and correlations to identify potential trading opportunities, which traders can access with a broker like PrimeXBT. As a leading multi-asset broker, PrimeXBT provides traders with the opportunity to engage in trading over 100 Forex and CFD assets, including the S&P 500.
How is the current price of the Dollar Index holding out?
Looking at the current price of the Dollar Index, we can see that, on a higher time frame, it is trading within a supply zone ranging from approximately 108.000 to 114.700. This area also aligns with price rebalancing on the Fibonacci tool, as the index is currently positioned above the 50% level. It will be interesting to see whether the Dollar Index continues to rise or fall from these key levels, particularly in light of the potential tariff policies Trump plans to implement.
Dollar Index (DXY):
Graph source: Tradingview (PrimeXBT)
During Trump’s previous presidency, the Dollar Index experienced significant fluctuations, reaching a peak of approximately 104.000, a 3.35% increase from its opening level. However, it also saw a sharp decline, dropping to lows of 88.250, a decrease of over 12% within the same period. The chart below provides a visual representation of these movements.
Dollar Index (DXY):
Graph source: Tradingview (PrimeXBT)
During Trump’s first term, the Dollar Index saw notable volatility, reaching a high of 104.000, a 3.35% increase from its opening level. Conversely, it also dropped to a low of 88.250, reflecting a decline of more than 12%. The chart below visually illustrates these fluctuations.
Dollar Index (DXY):
Graph source: Tradingview (PrimeXBT)
While history doesn’t exactly repeat itself, it often follows similar patterns. The question now is: will the Dollar strengthen or weaken in the coming years? And how will the S&P 500 react to a potential dollar weakness or strength under Trump’s current term.
How did the S&P 500 hold up in Trump’s previous term?
During Trump’s first term, we witnessed significant growth in prices over the four-year period. Below, you can observe how price action experienced considerable volatility, with the price dipping as low as $2,250 and rising as high as $3,959. This marked an increase of over 70% during the term.
S&P 500 (SDX):
Graph source: Tradingview (PrimeXBT)
Currently, the S&P 500 is at new all-time highs, with the price trading just over $6,000. If we were to see similar gains in the market, one might expect the price to be higher than its current level over the next four years. However, we must also remain cautious of potential downside risks. The markets are likely to experience heightened volatility during this period, and if such price swings continue, it wouldn’t be surprising to see both new highs and lows throughout the term.
S&P 500 (SDX):
Graph source: Tradingview (PrimeXBT)
Trading the Dollar Index impact on the S&P 500 with PrimeXBT
As these global economic events unfold, and the macro landscape heats up, potential trading opportunities can emerge. PrimeXBT, a leading CFD broker, offers an all-in-one trading platform to access over 100 popular markets, including CFDs on Crypto, Forex, Indices, Commodities, as well as Crypto Futures, all with some of the best trading conditions in the industry. With a focus on accessibility and innovation, PrimeXBT lowers the barriers to entry, providing easy and secure access to the financial markets. It empowers traders with the tools they need to trade efficiently and stay ahead, delivering a seamless trading experience.
Learn more about PrimeXBT
Contact Person: Mike Karkhalev
Company: PrimeXBT Trading Services Ltd
Email: pr@primexbt.com
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Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. Virtual assets are inherently volatile and subject to significant value fluctuations, which could result in substantial gains or losses. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. PrimeXBT does not accept clients from Restricted Jurisdictions as indicated in its website.
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