The CFTC report showed that expectations for a reversal in the dollar have not materialized. After three weeks of relative stability, during which the total short position on the USD against major currencies showed signs of the end of the sell-off, the short position grew again by $913 million over the reporting week, reaching -$13.27 billion.

Once again, the pound and the euro are leading in demand, while changes in other currencies are minimal. The dollar is unable to stabilize expectations due to high uncertainty — a good example being the preliminary and final reports from the University of Michigan. The final May survey on consumer sentiment from the University of Michigan showed a promising surge in optimism and a decline in inflation expectations, in contrast to the much gloomier preliminary report. This discrepancy was largely due to news released between the two survey periods about a U.S.-China trade agreement being prepared.

Other data also fail to provide a clear picture. The Atlanta Fed's GDP growth estimate for the second quarter sharply rose to 3.8% quarter-on-quarter (from 2.2%) last Friday, but this increase was solely due to a sharp decline in imports. In the first quarter, GDP figures were distorted toward lower values due to a surge in imports, while in the second quarter, the data will likely be skewed toward higher values due to falling imports. This kind of arithmetic prevents any clear certainty from emerging.

With just over two weeks until the FOMC meeting, the market is anticipating a slowdown in economic growth in the second half of the year, combined with higher inflation, and now estimates the likelihood of this scenario at over 40%.

This suggests that the FOMC will likely maintain a pause on rate cuts. The CME futures market projects only two rate cuts this year, and slower rate reductions should theoretically support yields and demand for the dollar. While yields do remain high, the dollar remains under pressure — precisely because of the looming economic slowdown. The FOMC is forced to ignore signs of slower growth paired with higher expected inflation and thus keep interest rates where they are.

Another reason for the dollar's weak demand is the emergence of alternatives to dollar-denominated bonds. In Japan, the Bank of Japan has begun unwinding QE amid rising core inflation. Yields on long- and ultra-long-term Japanese bonds are expected to rise, attracting international investors and making Japanese bonds more competitive.

Taking all factors into account, we conclude that in the medium term, the dollar is more likely to move downward rather than upward. The U.S. decision to double sectoral tariffs on steel and aluminum — and the potential for expanding tariffs of 25–50% to sectors such as pharmaceuticals, semiconductors, and aerospace — introduces asymmetric downside risks for both U.S. growth and the USD. The U.S. remains highly vulnerable to import disruption, and a trade war could inflict far greater damage on the U.S. economy than on its targeted trading partners.

As for the stock market, despite the strong recovery of the S&P 500 after falling to 4800, we still see the main scenario as a decline rather than further growth of the index.

Nominal GDP growth supports the stock market, but weighing against further growth are the slowdown in real economic growth and the reduced inflow of foreign capital. We assume that a return to 6150 is unlikely, and once the consolidation zone is broken, the index will begin moving toward 5500.