The US Dollar started the week on a positive note, as traders reacted to renewed trade tensions with a more cautious stance.
Over the weekend, US President Donald Trump announced a 25% tariff on all steel and aluminum imports. The tariffs could provoke further global trade frictions and affect economic growth.
As a result, the escalating tension could reinforce the dollar’s safe-haven appeal, improving its short-term outlook.
Meanwhile, the US treasury yields were stable, with the 10-year note around the 4.5% mark. However, volatility is expected to increase driven by tomorrow’s Fed Chair Jerome Powell’s testimony.
Hawkish comments could bolster the dollar and yields, while dovish remarks could do the opposite. Additionally, market participants will closely watch key US data releases this week, including CPI and retail sales figures, which could influence the dollar’s trajectory.
Elsewhere, ongoing concerns about slowing economic growth in the Eurozone and uncertainty surrounding the upcoming German elections should continue to weigh on the Euro, favoring the dollar.
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