Dollar index dips despite inflation expectations and Tariff mitigation hopes
The US Dollar Index, which tracks the performance of the greenback against a basket of major currencies, declined in early Tuesday trading. Reports in the press suggest that the incoming Trump administration is considering a gradual implementation of trade tariffs to mitigate their potential inflationary impact. If confirmed, this would be welcome news for those concerned that the protectionist agenda might drive inflation and force the Federal Reserve to adopt increasingly restrictive measures, pushing Treasury yields higher and strengthening the dollar. Additionally, traders appear to have taken profits by closing long positions on the dollar ahead of key US inflation data, with PPI figures due later today and CPI tomorrow. Both inflation metrics are expected to show an increase in December compared to November. If confirmed, this scenario could provide upside for the US dollar.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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