Dollar Strengthens Sharply! Trump's Tariff Threats Unnerve Markets
The US dollar strengthened against most major currencies at the start of this week, driven by escalating trade tensions after President Donald Trump threatened to impose 30% tariffs on Mexico and the European Union starting August 1. At the same time, market participants prepared for the release of US inflation data (CPI) on Tuesday, which could provide new direction for the Fed's interest rate policy.
The Bloomberg Dollar Spot Index recorded gains for the third consecutive day, rising 0.2% before correcting slightly at the opening of trading in London. Technical analysts see room for further dollar strengthening, especially if inflation data supports the scenario of a delayed interest rate cut.
Trump's new tariff threats were made public in two official letters he posted on social media over the weekend. He emphasized that Mexico and the European Union would face high tariffs if they failed to renegotiate their trade agreement with the US. This increased demand for the dollar as a safe haven, especially amid geopolitical uncertainty.
Several major currencies weakened against the dollar. The British pound (GBP/USD) fell 0.3% to 1.3452, its lowest level in three weeks, while the euro (EUR/USD) fell for the fourth consecutive day to 1.1651. Meanwhile, the Australian dollar (AUD/USD) also came under pressure, falling 0.4% before paring losses, despite better-than-expected Chinese export data.
Currently, market participants are focused on the release of US CPI data, which will be a key indicator of the direction of the Federal Reserve's interest rate policy. If inflation remains high, the dollar has the potential to strengthen further. However, if the data slows significantly, speculation of interest rate cuts could further weaken the dollar.
Source: (ayu-newsmaker)
