The US Dollar trades with little movement following President Trump's announcement of 25% tariffs on steel and aluminum imports from all countries. Meanwhile, Gold hits new record highs, seen as a safe haven against potential economic disruptions. The Federal Reserve Chair's testimony this week will be a key market focus.
The US Dollar is experiencing muted trading activity following recent comments on tariffs, while Gold is reaching new all-time highs. A 25% levy on all steel and aluminum imports from every country has been announced. The US Dollar Index (DXY), which monitors the performance of the US Dollar against six major currencies, is showing little movement, hovering around 108.00. This Monday's stagnation comes after a weekend filled with significant headlines.
US President Donald Trump declared a 25% tariff on steel and aluminum imports from all countries. Additionally, plans for reciprocal tariffs are under consideration, which would increase US import duties to match those imposed by its trading partners. Conversely, Gold, the precious metal, continues to set fresh all-time highs nearly every hour, trading above $2,900 for the first time ever. Gold is widely viewed as a safe haven and a hedge against any tariff-related disruptions that could impact equities, bonds, or the US Dollar. Apart from these tariff developments, the economic calendar for the start of the week remains relatively calm. Traders are anticipated to focus on Federal Reserve (Fed) Chair Jerome Powell's semi-annual testimony to Capitol Hill on Tuesday and Wednesday. Investors will be seeking fresh insights into the trajectory of US monetary policy, and Powell is likely to emphasize the resilience of the economy as a key reason for the central bank's reluctance to further reduce borrowing costs.Beyond the headlines from US President Donald Trump regarding reciprocal tariffs and steel and aluminum import tariffs, Bloomberg reports that no concrete timelines or dates have been provided. The US Treasury is scheduled to auction a 3-month and a 6-month bill at 16:30 GMT. Equity markets are not displaying enthusiasm for President Trump's announcement of additional tariffs. All major indices are trading in the green on Monday. The CME FedWatch tool predicts a 93.5% likelihood that the Fed will maintain interest rates unchanged at its next meeting on March 19. The US 10-year yield is trading around 4.49%, recovering further from its recent yearly low of 4.40% recorded last week.The US Dollar Index (DXY) is demonstrating minimal volatility on Monday and is not participating in the safe-haven flight away from tariffs. Gold appears to be the primary beneficiary in this situation. Meanwhile, US yields are experiencing a slight increase, although it is not substantial enough to significantly bolster the US Dollar. Traders are currently assessing their next steps in response to these additional tariff announcements. On the upside, the initial resistance level at 109.30 (July 14, 2022, high and rising trendline) was briefly surpassed but failed to hold last week. Once this level is reclaimed, the next target before further advancement lies at 110.79 (September 7, 2022, high). On the downside, the October 3, 2023, high at 107.35 continues to act as strong support after facing several tests last week. If further downside occurs, look for 106.52 (April 16, 2024, high) or even 105.98 (resistance in June 2024 and 100-day Simple Moving Average) as more reliable support levels.
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