The dollar index weakened to 101.5 on Tuesday, retreating further from recent highs after softer-than-expected US inflation data pointed to only a limited near-term impact from President Donald Trump's recently imposed tariffs on Chinese goods.
Dollar slips as US inflation unexpectedly cools
According to the Bureau of Labor Statistics, consumer price inflation eased to 2.3% in April, its lowest reading since February 2021 and slightly below market forecasts of 2.4%, reinforcing concerns that underlying price pressures are moderating despite trade tensions. On a monthly basis, CPI edged up 0.2%, recovering from a 0.1% dip in March but still falling short of the expected 0.3% rise, further adding to the case for potential Federal Reserve easing later this year. Core inflation, which excludes volatile food and energy prices, remained unchanged at 2.8% year-over-year, matching a four-year low and underscoring the persistent softness in underlying inflation dynamics. Meanwhile, investors continued to assess the broader implications of the temporary tariff rollback agreed upon by the US and China, which reduced tariffs to 30% and 10%, respectively, for a 90-day window as both sides attempt to revive stalled negotiations.
More US-China meetings ahead
Treasury Secretary Scott Bessent confirmed that preparations were underway for a high-level meeting with Chinese officials in the coming weeks, aimed at laying the groundwork for a more comprehensive trade agreement. Nevertheless, market participants remained cautious, noting that while the tariff truce offered some immediate relief to global markets, it did little to resolve the deeper structural issues at the heart of the ongoing US-China trade conflict.
