The dollar index continued its recent rally, holding above 108.3 on Tuesday, as President Donald Trump signed an executive order imposing 25% tariffs on steel and aluminum imports "without exceptions or exemptions."
Dollar index continues its recent rally
Trump also announced plans to implement reciprocal tariffs on other countries in the coming days, heightening concerns about a potential global trade war. Such a scenario could spur inflation, which may limit the Federal Reserve's flexibility in cutting interest rates further. These trade tensions are keeping markets on edge, with traders bracing for more volatility.
Traders await Powell at US Congress
Adding to the market’s anticipation, traders were preparing for Fed Chair Jerome Powell's testimony before Congress on Tuesday and Wednesday, hoping to gain more clarity on the central bank's future stance on interest rates. The latest consumer inflation report, due Wednesday, will be closely watched for insights into price pressures, while producer inflation data set for release on Thursday could offer further indications of economic trends.
Dollar holds firm across most major currencies
While the dollar held firm across most major currencies, it struggled against the Australian dollar, which received support from stronger commodity prices, especially in the wake of rising demand for raw materials. This dynamic is making for a highly volatile week in currency markets, as traders assess both economic data and geopolitical developments.
