US Dollar Holds Pullback
The dollar index was below 98 on Tuesday, holding the pullback from the four-week high of 99 touched on July 17th as markets continued to assess the latest developments to US trade policy and how it may impact Fed rate decisions.
Treasury Secretary Bessent noted that the administration prioritizes the quality of trade agreements over timing, downplaying the number of trade deals to be struck in the next two weeks and potentially paving the way for aggressive tariffs to be enforced at the start of August.
Remarks from selected Fed officials and the latest FOMC minutes indicated that multiple members see tariffs as inflationary, driving the central bank to delay the continuation of rate cuts. Among major pairs in the index, the yen gained as Japan's Prime Minister Ishiba is expected to stay in office and fend off political instability.
Also, the ECB is expected to halt its cutting momentum this week, potentially narrowing the rate differential with the Fed by the end of Q3.
Source : Trading Economics