Dollar Surges Amid Trade Tariff Debates

The U.S. dollar has maintained its strong upward momentum into the start of the week, bolstered by ongoing debates surrounding the White House’s trade tariff policies, speculation about further Federal Reserve interest rate cuts, and uncertainty over who will succeed Chair Jerome Powell. Meanwhile, global markets are closely watching the Reserve Bank of India (RBI), which is widely expected to keep its benchmark interest rate steady at 5.50% during its Wednesday meeting, reflecting a cautious approach amid international trade tensions.

The U.S. Dollar Index (DXY) gained further traction, climbing to a two-day high above the critical 99.00 level, supported by a modest rebound in U.S. Treasury yields across the curve. On Wednesday, investors await the weekly MBA Mortgage Applications data, alongside the EIA’s report on U.S. crude oil inventories. Additionally, speeches from Federal Reserve members Collins, Cook, and Daly are expected to provide insights into future monetary policy directions. Meanwhile, the euro faced continued pressure against the dollar, with the EUR/USD pair slipping to the 1.1530-1.1520 range for the second consecutive day. In Europe, attention turns to Germany’s Factory Orders, the HCOB Construction PMI for Germany and the eurozone, and retail sales data for the region.

In the United Kingdom, the GBP/USD pair saw a slight uptick, revisiting the 1.3300 region as investors shift focus to the upcoming Bank of England meeting. The S&P Global Construction PMI will be the key release from the UK. In Japan, the USD/JPY pair regained momentum, approaching the significant 148.00 level, with markets awaiting the release of Average Cash Earnings data. In Australia, the AUD/USD pair remained range-bound below the 0.6500 threshold, continuing its indecisive tone, with the Ai Group Industry Index as the next key release on the Australian calendar.

In the commodities market, West Texas Intermediate (WTI) crude oil prices fell for the fourth consecutive day, dropping to multi-day lows near the $65.00 per barrel mark, following OPEC+’s decision to increase its oil output. In precious metals, gold prices encountered resistance around the $3,380 per ounce level, experiencing mild downward pressure after three days of gains. Silver prices, however, extended their recovery for the third straight day, testing the $37.50 per ounce region. These developments highlight a cautious sentiment in global markets, with U.S. trade policies and monetary policy expectations remaining at the forefront of investors’ attention.