US dollar remains volatile amid tariff uncertainty and inflation data
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The US Dollar Index (DXY) remained subdued, hovering near 103.60 early Wednesday after recording seven consecutive days of losses, reflecting continued market uncertainty driven by erratic tariff policy announcements from former President Donald Trump.
Tuesday saw significant fluctuations as Trump's announcement of an increased tariff on Canadian steel and aluminum imports initially rattled markets. The tariff was briefly raised to 50%, only to be partly reversed within hours, highlighting ongoing policy instability and contributing to persistent volatility in global currency markets.
This unpredictability has notably weakened the dollar against major currencies, benefiting rivals such as the Euro, Yen, and Sterling. EUR/USD, in particular, reached a new multi-month peak at $1.0946 before stabilizing near $1.09.
Investors now shift their focus to crucial economic data, specifically the February Consumer Price Index (CPI), due later today. Expectations indicate a slight moderation in inflation to 2.9%, down from January’s 3.0%. The CPI outcome will significantly influence the US Dollar's direction, as it impacts future Federal Reserve interest rate decisions.
Traders are advised to closely monitor the inflation report and ongoing tariff developments, as these elements remain central to gauging near-term USD strength and overall market sentiment.
Tuesday saw significant fluctuations as Trump's announcement of an increased tariff on Canadian steel and aluminum imports initially rattled markets. The tariff was briefly raised to 50%, only to be partly reversed within hours, highlighting ongoing policy instability and contributing to persistent volatility in global currency markets.
This unpredictability has notably weakened the dollar against major currencies, benefiting rivals such as the Euro, Yen, and Sterling. EUR/USD, in particular, reached a new multi-month peak at $1.0946 before stabilizing near $1.09.
Investors now shift their focus to crucial economic data, specifically the February Consumer Price Index (CPI), due later today. Expectations indicate a slight moderation in inflation to 2.9%, down from January’s 3.0%. The CPI outcome will significantly influence the US Dollar's direction, as it impacts future Federal Reserve interest rate decisions.
Traders are advised to closely monitor the inflation report and ongoing tariff developments, as these elements remain central to gauging near-term USD strength and overall market sentiment.