The US Dollar Index rallied to fresh weekly highs, fueled by escalating tariff tensions and disappointing US economic reports. Despite these headwinds, the DXY demonstrated resilience, signaling some stability in the face of market uncertainty.
The US Dollar Index ( DXY ) strengthened on Tuesday, surpassing the significant 108.00 level and reaching a fresh weekly high. This upward movement coincided with a deteriorating market sentiment driven by concerns over escalating tariffs and underwhelming US economic data . Despite these challenges, the DXY demonstrated resilience, holding above its recent lows. The catalyst for the Dollar's gain was a combination of factors.
Fears of intensifying trade tensions resurfaced after Treasury Secretary Scott Bessent proposed gradual tariffs on all US imports, starting at 2.5%. This suggestion was quickly countered by President Trump, who advocated for significantly higher, uniform tariffs, leaving investors apprehensive. Adding to the unease were disappointing economic indicators. US Durable Goods Orders fell by 2.2% in December, falling short of the projected 0.8% increase. This decline was primarily attributed to a 7.4% drop in transportation equipment orders. While new orders excluding transportation exhibited a modest 0.3% rise, the overall trend painted a bleak picture for the US economy. Furthermore, the Conference Board's Consumer Confidence Index dropped to 104.1 in January from 109.5 in December, reflecting growing anxieties about the economic outlook. Concerns about overvalued shares in the artificial intelligence sector also contributed to a cautious market mood, discouraging risk-taking and bolstering the safe-haven appeal of the US Dollar. Market participants are now awaiting the Federal Reserve's policy decision on Wednesday, where a hold in interest rates is already widely anticipated
US Dollar DXY Tariff Trade War Economic Data Consumer Confidence Durable Goods Orders Federal Reserve
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