DXY: Dollar index rises for third day ahead of Powell’s testimony
Press Hub UCapital
Share:
The U.S. Dollar index extended its winning streak for the third consecutive session, reaching 108.40 early Tuesday as investors weighed the impact of U.S. trade policy and anticipated Federal Reserve chair Jay Powell’s testimony before Congress.
Dollar strengthens as tariffs fuel demand
The DXY index, which tracks the greenback’s performance against a basket of six major currencies, has maintained upward momentum amid renewed trade tensions. President Donald Trump’s latest round of protectionist policies, including a 25% tariff on steel and aluminum imports, has added support to the dollar’s bullish outlook.
More tariffs on the horizon?
Trump is expected to unveil further tariff measures this week, possibly as soon as today. The proposed “reciprocal tariffs” aim to level trade imbalances by imposing duties equivalent to those levied by U.S. trading partners. If enacted, these measures could stoke volatility in currency markets, potentially bolstering the dollar in the short term. Tariffs function as an indirect stimulus for the domestic economy by discouraging foreign imports and favoring local production. As U.S. businesses absorb the impact of higher import costs, increased economic activity could further support dollar strength.
Powell’s testimony in focus
Federal Reserve chair Jay Powell is set to deliver his semi-annual testimony to the Senate today, followed by an appearance before the House of Representatives tomorrow. His remarks on inflation, interest rates, and trade policy will be closely scrutinized by forex traders for clues on the Fed’s next move. The focus will quickly shift to Wednesday’s inflation report, with the consumer price index (CPI) expected to show price growth holding steady at 2.9% year-over-year in January. The data will be a key input for the Fed’s rate outlook and could set the stage for further volatility in the dollar’s trajectory.
Dollar strengthens as tariffs fuel demand
The DXY index, which tracks the greenback’s performance against a basket of six major currencies, has maintained upward momentum amid renewed trade tensions. President Donald Trump’s latest round of protectionist policies, including a 25% tariff on steel and aluminum imports, has added support to the dollar’s bullish outlook.
More tariffs on the horizon?
Trump is expected to unveil further tariff measures this week, possibly as soon as today. The proposed “reciprocal tariffs” aim to level trade imbalances by imposing duties equivalent to those levied by U.S. trading partners. If enacted, these measures could stoke volatility in currency markets, potentially bolstering the dollar in the short term. Tariffs function as an indirect stimulus for the domestic economy by discouraging foreign imports and favoring local production. As U.S. businesses absorb the impact of higher import costs, increased economic activity could further support dollar strength.
Powell’s testimony in focus
Federal Reserve chair Jay Powell is set to deliver his semi-annual testimony to the Senate today, followed by an appearance before the House of Representatives tomorrow. His remarks on inflation, interest rates, and trade policy will be closely scrutinized by forex traders for clues on the Fed’s next move. The focus will quickly shift to Wednesday’s inflation report, with the consumer price index (CPI) expected to show price growth holding steady at 2.9% year-over-year in January. The data will be a key input for the Fed’s rate outlook and could set the stage for further volatility in the dollar’s trajectory.