The US dollar is expected to snap a three-day rising streak on Tuesday as markets become increasingly numb to US tariff threats. Federal Reserve Chair Jerome Powell’s semiannual monetary policy testimony will be closely watched later in the day, along with inflation data set for release on Wednesday.
Powell’s testimony will provide insights into the Fed’s stance on monetary easing and its potential impact on economic growth and inflation. Recent comments from Fed officials have highlighted their cautious approach to further rate cuts, citing uncertainty over the effects of US President Donald Trump’s policies.
The US dollar index fell 0.1% at 108.28, down from a 37 basis points’ worth of expected Fed rate cuts by the year-end. Analysts say that while the threat of more US tariffs remains, the risks have diminished slightly.
The euro rose 0.15% to $1.0320 against the greenback, driven in part by growing optimism about a potential ceasefire deal in Ukraine. The yen dropped 0.15% to 152.22 per dollar, following its best performance since January’s Bank of Japan meeting.
Canada, Brazil, Mexico, South Korea, and Vietnam are among the biggest sellers of steel into the US, while Canada is the dominant supplier of imported aluminum. Australian Prime Minister Anthony Albanese confirmed that Trump has agreed to consider exempting Australia from his steel and aluminum tariffs, in a constructive phone call with the US president.
The European Union said it would respond with “firm and proportionate countermeasures” after Trump’s decision to impose tariffs on all steel and aluminum imports.
Source: https://www.reuters.com/markets/currencies/dollar-underpinned-by-latest-tariff-moves-eyes-powell-us-inflation-2025-02-11