The US dollar index (DXY) climbed closer to 108.00, as renewed focus on former President Donald Trump’s tariff policies fueled speculation about their potential impact on trade and inflation. Investors reassessed the outlook for the greenback, betting that proposed tariff adjustments could drive demand for the US dollar amid broader economic uncertainty.
Traders reacted to reports that Trump’s trade stance may include higher tariffs on imports, a move that could stoke inflationary pressures and influence future Federal Reserve policy decisions. With global markets already navigating a complex economic environment, the possibility of tighter trade restrictions has strengthened safe-haven demand for the dollar, keeping DXY well-supported.
At the same time, expectations for higher-for-longer interest rates continued to underpin dollar strength, as recent economic data reinforced the Fed’s cautious stance on rate cuts. The combination of resilient US growth and potential trade shifts has provided fresh momentum for the US dollar, even as global currencies struggle to keep pace.
Despite the bullish momentum, some analysts warn that DXY may face resistance if economic conditions shift or if policymakers push back against aggressive tariff measures. If US economic data begins to show signs of softening, or if inflation eases faster than expected, the greenback’s rally could lose steam.
For now, the US dollar index remains on an upward trajectory, with traders closely watching developments in trade policy and upcoming Fed communications for further direction. The currency’s next move will likely depend on how markets interpret tariff-related risks and their broader implications for monetary policy.
