The US Dollar could come under pressure amid escalating trade tensions and mounting fears of an economic slowdown.
President Trump confirmed over the weekend that his upcoming reciprocal tariffs will apply to all countries, raising concerns over potential retaliation, inflationary spillovers, and a sharper slowdown in global trade activity.
The cautious market tone was reflected in US Treasury yields, with the 10-year note falling to 4.2% as investors moved toward safer assets.
Meanwhile, investors now anticipate that the Federal Reserve may respond with up to 75 basis points in rate cuts by year-end. While economic concerns dominate, inflation risks could limit the Fed’s room for manoeuvre.
Looking ahead, investor focus turns to key economic releases, including the ISM PMIs and Friday’s Non-Farm Payrolls report. Weaker readings could weigh further on the dollar, reinforcing expectations of monetary easing. Conversely, robust results may offer temporary relief for the greenback, though lingering trade concerns are likely to cap any upside.
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