Dollar Gains Slightly, Markets Remain Wary of Trump's Tariffs
The US dollar strengthened slightly on Tuesday (February 24th) after a correction in the previous session, as markets reassessed the impact of US President Donald Trump's changes to the tariff regime on the economic outlook and global trade stability. The dollar index (DXY) showed limited gains, reflecting a less-than-convincing recovery effort amid growing policy uncertainty.
The main source of volatility remains US trade policy following the Supreme Court's ruling that the use of the 1977 emergency law to impose tariffs exceeded its authority. The ruling forced the White House to seek new legal avenues to maintain its tariff agenda, adding another layer of policy risk and increasing uncertainty for businesses and trading partners.
Trump then announced a temporary increase in tariffs from 10% to 15% on imports from all countries. This statement raised questions among several countries about the reliability of previously signed trade agreements, as policy direction appeared to change rapidly depending on political dynamics and Washington's negotiating strategy.
In Europe, the euro remained stable with limited volatility. ECB President Christine Lagarde assessed that interest rate policy was in a "good" position, but emphasized the need to be agile if economic and inflation conditions change. At the same time, the European Parliament postponed a vote on the EU-US trade deal, indicating caution regarding the implications of new import taxes from the US.
The market now awaits a series of US events that could sway intraday sentiment: ADP employment data, consumer confidence data, statements by Fed officials, and Trump's State of the Union address. The combination of economic data and central bank communications is seen as crucial because it will determine whether the dollar's strengthening is merely a technical correction or the beginning of a stronger trend.
On the other hand, trade uncertainty has emerged alongside growing doubts about the sustainability of massive investment in the AI sector and questions about the strength of the US economy's fundamentals following the release of weak growth data. This situation has placed the market in a "tug-of-war" pattern: the dollar enjoys support as a liquid and defensive asset, but its room for strengthening could be limited if growth concerns dominate.
In Asia, the yen weakened sharply as expectations of Bank of Japan policy tightening were seen as imminent, while the reopening of Japanese markets added to volatility. In China, the yuan remained stable after the People's Bank of China (PBOC) maintained its fixed interest rate (LPR), affirming its measured stimulus approach. Commodity currencies such as the Australian Dollar (AUD) and New Zealand Dollar (NZD) edged higher, following improved sentiment after the previous session's turmoil.
5 Key Points
The US dollar edged higher after declining in the previous session, but the market remains uncertain about its future direction.
Tariff uncertainty increased following the Supreme Court ruling, prompting the market to reassess policy risks.
The euro remained relatively stable; the ECB assessed policy as "in a good place," while the EU delayed ratification of the trade deal with the US.
Intraday focus: ADP, consumer confidence, Fed officials' comments, and Trump's State of the Union address.
The yen weakened; the yuan stabilized after the LPR was maintained; the AUD and NZD edged up following improved sentiment.
Source: Newsmaker.id
